USD Coin (USDC) issuer Circle plans to use “corporate resources” to cover the shortage of reserves. After the closure of Silicon Valley Bank, according to the companysaid in a statement on March 11.
According to Circle, USDC liquidity operations will “resume normal operations when banks open Monday morning in the United States” and enable USDC redemption at a 1:1 basis against the US dollar.
The announcement comes after the stablecoin pegged against the dollar on March 11, dropping as low as $0.87 before slowly regaining the peg at $0.98 at time of writing.
Silicon Valley Bank is one of the largest lenders in the United States. The bank was closed March 10 by the California Department of Finance and Innovation, with the Federal Deposit Insurance Corporation appointed as the recipient of insured deposit protection.
Circle asserts that Silicon Valley is a “respectable and trusted partner to the US economy,” which has experienced a bank run like the one we saw during the 2008 financial crisis, with few traditional banks surviving. liquid enough to withstand such a bank run.”
“The fate of SVB is being decided this weekend by the FDIC, and we hope they find a solution that protects 100% of our customers’ assets.”
Bob Elliot, chief investment officer at Unlimited Funds, said “there are big banks working on buying the svb business,” with the US Federal Deposit Insurance Corporation (FDIC) protecting 95% of unsecured deposits to buyers and “50% of unsecured deposits.” % of the uninsured money will be paid out next week.”
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