Stablecoin issuer Circle announced late Friday that $3.3 billion in cash deposits were stuck at Silicon Valley Bank (SIVB), the lender which was closed earlier in the day by regulators after suffering a run on deposits. This sum represents a portion of the total reserves backing Circle’s stablecoin USDC.
Silicon Valley Bank was one of the six banking partners where Circle held a part of the reserve assets backing its $40 billion USDC stablecoin.
USDC is the second largest stablecoin on the market and a critical component of the crypto economy. Worried investors redeemed more than $1 billion of USDC tokens over Friday, causing USDC to momentarily lose its dollar-peg on some exchanges and pushing the largest stablecoin swap pool on decentralized finance platform Curve into heavy imbalance.
At the time of writing, USDC had fallen to 0.945 USDT, the largest dollar-pegged stablecoin, on crypto exchange Kraken.
“Circle is currently protecting USDC from a black swan event in the U.S. banking system,” Dante Disparte, Circle’s chief strategy officer, tweeted late Friday. “SVB is a significant bank in the U.S. economy and its collapse – without a Federal rescue plan – will have broader implications for business, banking and entrepreneurs,” he added.
UPDATE (Mar. 11, 04:48 UTC): Adds USDC price on Kraken and comment from Circle chief strategy officer Dante Disparte.
