Yesterday in the altcoin news, you could read that USD Coin (USDC), the second-largest stablecoin issued by Circle, lost its peg to the US dollar. On some crypto exchanges, the USDC price had even fallen to a low of $0.87. This crash had everything to do with Circle’s significant exposure to the defunct Silicon Valley Bank (SVB).
Circle now has in one blog post stating that it will “stand behind USDC and cover any shortfalls with company resources, with external capital if necessary”.
Circle exposure to SVB
Last week the news came out that SVB was closed by American regulators because it had become financially unstable. Circle had a total of $3.3 billion in USDC collateral held with SVB, which equates to approximately 8% of total reserves.
Just before the implosion, it made another attempt to withdraw the $3.3 billion from SVB, but was unable to do so in time. Many crypto investors sold their USDC as quickly as possible after the news was released by Circle.
The USDC exchange rate is rising again towards the dollar
In the blog post, Circle said it will resume normal operations when US banks open Monday and that USDC will remain exchangeable one-to-one with the US dollar.
Circle is hopeful that the FDIC, a US regulator that has taken over management of SVB, will find a buyer for SVB who will ensure that savers will not be left with losses.
It also indicates that the FDIC is currently determining the status of transactions initiated before the bank closed, and that transfers initiated on Thursday may be processed on Monday.
At the time of writing, the value of USDC has risen to $0.95, according to data from CoinMarketCap.