- USDC has re-pegged to $0.99 after crashing to lows of $0.88 last week.
- Circle, the company that issues the stablecoin, has announced the $3.3 billion risk on USDC reserves has been removed.
- The firm also noted it had no USDC reserves exposure with Signature Bank.
The USD Coin (USDC) stablecoin is nearly fully re-pegged following last week’s massive de-pegging to under $0.90.
Data from CoinGecko showed that USDC had repegged nearly 4% in the past 24 hours, with the stablecoin above $0.99 as of 7.20 am ET on Monday. As tweet below from CoinGecko indicates, USDC has indeed held impressively above $0.99 since late Sunday.
$USDC is now at $0.993 following a joint statement from the Federal Reserve, Treasury Department and FDIC that all depositors in Silicon Valley Bank will be made whole and have access to their funds on Monday. pic.twitter.com/Y7GsTS6W3Z
— CoinGecko (@coingecko) March 13, 2023
The upbeat mood stemming from the USDC news has also permeated the broader crypto market, with Bitcoin price breaking above $22,000 and Ethereum reclaiming the $1,600 price level.
On Monday morning, Circle announced it was set to have its $3.3 billion USDC reserves that had been stuck at the collapsed Silicon Valley Bank (SVB) back. The development follows the move by the US Treasury and US prudential regulators’ swift action towards making depositors at SVB and the now shuttered crypto-friendly bank Signature Bank, whole.
Alfonso Peccatielo, founder & CEO of The Macro Compass, highlighted the Fed’s move and plans to “backstop other liquidity issues.”
This is how the Fed intends to backstop other liquidity issues: a new facility called Bank Funding Term Program
The idea is to provide banks with an alternative to liquidate their bond holdings when in need of raising liquidity to meet deposit outflows
Two important points:
— Alf (@MacroAlf) March 12, 2023
Circle says also announces “no exposure” to collapsed Signature Bank
According to Circle, the $3.3 billion at SVB accounted for about 8% of the entire USDC cash reserve backing. These money will be available when banks open (on Monday, 13 March 2023). Circle has cash reserves amounting to approximately $9.7 billion (23% of reserves) at the BNY Mellon.
Commenting on the US government’s move, Circle co-founder & CEO Jeremy Allaire, said in a press release:
“We are heartened to see the U.S. government and financial regulators take crucial steps to mitigate risks extending from the banking system. We’ve long advocated for full-reserve digital currency banking that insulates our base layer of internet money and payment systems from fractional reserve banking risk.”
Also notably, Circle has also reiterated that it had no cash reserves exposure at the closed Signature Bank. The company has also announced customers can now access automated USDC minting and redemption via its new banking partner Cross River Bank, maintaining USDC is redeemable 1:1 with the US dollar.
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