USDC stablecoin investors panicked when Circle declare exposure to shuttered banks, and the latest report Circle USDC reserves and evidence from Deloitte, a global auditing firm, confirms the connection.
However, in a recent development, Circle is reporting that it has virtually removed all minting and redemption requests for USDC. The current situation shows that the issuer has cleared all the backlog in transactions with stablecoins.
Before closing, SVB announced plans to boost its balance sheet by raising approximately $2.25 billion. This was after a loss of $1.8 billion through asset sales. The bank opted for asset sales when efforts to raise capital failed. But the whole situation was complicated by the fact that the sale resulted in a huge flow of deposits.
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Subsequently, California’s state financial regulator closed the bank on March 10, confiscating its deposits. The closure of SVB was linked to the opening of the bank which led to a capital crisis that marked the second largest implosion of a financial company in the US.
The revelation of the light Circle to the tune of more than $ 3 billion for Silicon Valley Bank pushed the USDC off the peg to the US dollar. Furthermore, the stablecoin de-pegged from the value of the dollar and even reached a record low there.
In its statement, Circle revealed that it has 8% of USDC reserves of $40 billion in Silicon Valley Bank. This means that approximately $3.3 billion of stablecoin reserves were trapped in the dead bank.
After the announcement, the USDC lost a peg of $1, falling to $0.87. The announcement from Circle created a frenzy for USDC, as crypto whales also suffered huge losses when they tried to withdraw their funds.
Circular Movement In Removing Minting Requests and USDC Redemptions
Circle sent blog on the official site, updating USDC operations after the initial announcement. It is revealed that almost all requests for redemption and minting of the USDC stablecoin have been completed.
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In an update, the issuer confirmed receiving massive customer requests between March 13 and 15. It minted almost $800 million USDC and redeemed $3.8 billion. It is noted that the activities of the past week have affected the liquidity operations for USDC. Also, acknowledge the support and patience of customers during the exhausting period.
In an effort to address the situation, Circle added a partnership with Bank of New York Mellon (BNY Mellon). The USDC issuer also announced a collaboration with a new banking partner, Cross River Bank. The partner helped USDC issuers make US transfers on March 14. Also, the partner does other international transfers for Circle to and from other countries.
As of Thursday, March 16, USDC is still trading at 1:1 parity to the US dollar. It remains the fifth largest cryptocurrency in the world with a market cap of $39.5 billion.
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