Crypto giant Circle survived a harrowing weekend that saw a flagship USDC stablecoin break the peg for the dollar, falling below 90 cents early Friday before a series of moves by banks and regulators restored confidence in the token. By midnight on Sunday, the USDC had recovered and was trading almost the same as the US dollar.
On Sunday night, Circle issued a press release stating that SVB’s $3.3 billion deposit – which is part of the reserve that generates USDC coins – is safe, and the token remains redeemable 1:1 with dollars.
The company also announced that it has added Cross River Bank—known for providing banking services to Visa, Coinbase and fintech companies—as a new commercial banking partner for the purpose of printing and redeeming USDC. Circle also announced another “expanded relationship” for USDC redemptions that includes BNY Mellon, which has provided custody services for the company’s reserves.
Circle’s announcement also noted that it has no exposure to Silvergate, the crypto-friendly bank that announced on Sunday it would voluntarily divest its holdings as part of a takeover process by federal regulators.
This weekend’s USDC crash is part of a larger financial turmoil caused by the collapse of Silicon Valley Bank (SVB), the nation’s 16th largest bank and a financial pillar of the tech and venture capital world. The failure of SVB caused panic as thousands of companies, including Circle, could not access billions in deposits. On Sunday, the Federal Reserve and other agencies calmed the market by announcing that depositors in the SBV would end.
In the case of Circle, the result of all this is that the company has survived the crisis of the weekend and is trying to minimize further risks by strengthening its relationship with larger financial institutions. In addition to its deepening relationship with BNY Mellon, Circle also relies on giant asset manager BlackRock to handle transactions related to USDC reserves.
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