In this photo illustration, a woman holds a smartphone with the USD Coin (USDC) logo on the screen.
Rafael Henrique | SOPA images | Lightrocket | Getty Images
USD coins (USDC) came close to regaining its dollar peg on Monday after stablecoin issuer Circle said the $3.3 billion it had with it now collapsed Silicon Valley Bank will be “fully available” when US banks open.
USDC is a type of cryptocurrency called a stablecoin that is meant to be linked one-to-one with American dollars. It is backed by real assets including US Treasuries and cash and is the second largest stablecoin in existence, behind tether.
Last week, Circle said $3.3 billion of its cash reserve is with SVB. After the collapse of the bank, USDC lost its $1 pegfalling as low as 86 cents on Saturday, according to CoinDesk data.
In total, Circle said it has about $9.7 billion in cash. $5.4 billion of that is now with BNY Mellon.
The company said that when US banks open on Monday, the 3.3 billion USDC reserve deposit held at Silicon Valley Bank will be fully accessible to people.
USDC was close to regaining its peg after Circle’s assurance, hovering just below the $1 mark at around 99 cents on Monday, according to CoinDesk data.
Circle’s announcement comes after US regulators last week shut down SVB and took control of its deposits, in what was the biggest bank failure since the 2008 financial crisis.
On Sunday, the US Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation said SVB’s depositors will have access to all their money from Monday.
Circle said USDC can still be redeemed 1-to-1 with the US dollar.
Jeremy Allaire, CEO of Circle, said Sunday that the company has entered into a new partnership with Cross River Bank to mint and redeem USDC.
Allaire also praised the government’s intervention in the SVB fiasco.
“We are pleased to see the US government and financial regulators taking decisive steps to reduce risks that extend from the banking system,” he said in a press release.
SVB is the latest in a handful of technology and cryptocurrency-focused lenders to go in recent days. Silvergate Capital, a major lender to the crypto industry, said on Wednesday liquidate the business and liquidate his bank. And on Sunday, US regulators shut down another crypto lender Signature Bankto prevent contagion to the banking sector.
Circle said it had no cash reserves with Signature Bank.
The broader cryptocurrency market rallied on Monday as regulators stepped in. Bitcoin jumped as much as 10%, rally above $22,000.