The Silicon Valley Bank logo is located on March 10, 2023 in San Francisco, California, USA.
Staff | Staff | Reuters
US crypto firm Circle’s USD Coin lost its dollar peg, dropping to a record low Saturday morning.
USDC is known as a stablecoin, meaning that the value of the cryptocurrency is pegged to the base currency. USDC, which is designed to trade at $1, fell below 87 cents on Saturday, according to CoinDesk data.
Regulators shut down SVB on Friday and seized deposits at SVB in what was the largest US bank failure since the 2008 financial crisis. The company’s epic implosion began late Wednesday, stunning investors with news that he would need to raise $2.25 billion to bolster its balance sheet. What followed was the rapid collapse of a highly respected bank that had grown with its technology customers.
In a tweet on Friday, Circle said SVB has $3.3 billion in reserves. The company said it wanted the bank to survive and would follow regulatory guidance.
The crypto industry is still on the road to recovery after last year’s sudden FTX demise, and USDC’s departure from the dollar could portend more trouble. Like banks, stablecoins are vulnerable to policing.
SVB customers withdrew a staggering $42 billion in deposits by the end of Thursday, according to California. Submissions to regulatory authoritiesBy the close of business that day, SVB had a cash balance of $958 million and was unable to gather sufficient collateral from other sources, according to filings.
If USDC holders feel uneasy or worried about not having enough money in their reserves, they can also sell or trade their coins on the fly.
The Circle did not immediately respond to a request for comment.