USDC Drops to 89 Cents After Holding Over 3.3 Billion Cash Reserves In Failed Silicon Valley Bank

March 11, 2023 10:03 am Comments

Who would’ve thought USDC would be in hotter water than USDT in 2023?

Circle Internet Financial announced $3.3 billion of its $40 billion cash reserves of USDC are stuck inside of Silicon Valley bank and as of right now, they have no access to their funds.

In a tweet Circle tweeted out “following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the ~$40 billion of USDC reserves remain at SVB.”

The news of USDC having cash reserves locked inside of SVB made the stable coin dip under 89 cents.

Per Bloomberg:

Stablecoin giant Circle Internet Financial Ltd said $3.3 billion of its about $40 billion of USD Coin reserves remain at Silicon Valley Bank, which collapsed in one of the largest bank failures in US history on Friday.

USD Coin drifted from its closely-watched dollar peg as investors reacted to its exposure to Silicon Valley Bank. The price of USD Coin, which trades under the ticker USDC, lingered below $1, falling to $0.9850 on Friday evening in New York. Stablecoins like USD Coin are intended to maintain a 1-to-1 peg to highly liquid assets like the US dollar or euro. With a circulation of around $40 billion, Circle’s token is second only to Tether’s USDT.

Circle held around $8.7 billion in cash at banks including Silicon Valley Bank as of Jan. 31, according to an attestation report issued earlier in March. Circle keeps a majority of its reserves in a BlackRock-managed money-market fund which invests in three-month Treasuries and cash. The rest of those reserves, representing 25% of the total, is held across Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank, Signature Bank and Silicon Valley Bank.

Noelle Acheson, who writes a crypto newsletter and is the former head of market insights at Genesis Trading, said investor concerns about their exposure was reflected in the “uncharacteristically high volatility” in the stablecoin’s price. “Tether’s USDT, on the other hand, is heading up as traders rotate positions,” she said. “In yet another example of how weird markets are right now, it is astonishing to see USDT act more like the ‘safe’ stablecoin.”

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