- Circle to cover shortfall if SVB doesn't return $3.3b cash reserve
- Currently, 1 USDC is trading for $0.97
Circle Internet Financial, the issuer of stablecoin USDC, has assured it will “cover any shortfall” if Silicon Valley Bank proves unable to return their $3.3 billion cash reserve in its entirety.
Crypto market went haywire over USDC value
The promise came as crypto investors panicked over the value of USDC, which lost its peg to the US dollar late Friday on news of the major bank’s collapse. The FDIC seized the assets of the bank, which is holding the $3.3 billion.
Currently, 1 USDC is trading for $0.97 on Coinmarketcap data. Circle wrote in a blog post:
As a regulated payment token, USDC will remain redeemable 1 for 1 with the US dollar. USDC is currently collateralized 77% ($32.4B) with US Treasury Bills (with a three month or less maturation period), and 23% ($9.7B) with cash held at a variety of institutions, of which SVB is only one. We deposited $5.4 billion with BNY Mellon, one of the largest and most stable financial institutions in the world, known for the strength of their balance sheet and as a custodian. $3.3 billion of USDC’s cash reserves remain with SVB. As of Thursday, we had initiated transfers of these funds to other banking partners. Though these transfers had not yet been settled as of close of business Friday, we remain confident in the FDIC’s management of the SVB situation and stand ready to receive these funds.
They added that the FDIC should allow settlement as normal until it takes control of SVB, drawing attention to the possibility that the transfers initiated on Thursday would be processed on Monday.
Circle stated that SVB had a solid franchise that was at the heart of American tech industry and entrepreneurship growth. They hope that under receivership terms, the FDIC will find an equally strong franchise to buy SVB and ensure deposit wholeness.
Circle will stand behind USDC
Circle conceded that SVB might not return the funds in full or that the process could be delayed. If this happens, Circle will back USDC and “cover any shortfall” using their own funds, including external ones if necessary.
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