Mar 11, 2023

Circle Confirms $3.3B of USDC Reserves Held at SVB

On March 10, blockchain payment tech company and USD Coin (USDC) issuer Circle caused a stir in the web3 space when it confirmed that $3.3 billion of its $40 billion USDC reserves were still held up in the now bankrupted Silvergate and Silicon Valley Bank (SVB).

Circle took to Twitter to provide transparency on the matter, stating:

“Following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the ~$40 billion of USDC reserves remain at SVB.”

The company also emphasized that it is now joining other customers and depositors in calling for the continuity of SVB, which is important for the U.S. economy. Circle also stated that it will follow guidance provided by state and Federal regulators.

Circle’s chief strategy officer and head of global policy, Dante Disparte, added that Circle is currently protecting USDC from a black swan failure in the U.S. banking system, and called for a SVB rescue plan from the Federal Deposit Insurance Corporation (FDIC).

The news of the USDC reserves being held up caused USDC to drop significantly to $0.93 at the time of writing.

Coinbase and Binance also responded to the news, both announcing that they are temporarily pausing USDC:USD conversions over the weekend while banks are closed. Coinbase stated that when banks open on Monday, they plan to re-commence conversions. Binance stated that they have “temporarily suspended auto-conversion of USDC to BUSD due to current market conditions.”

The news of the USDC reserves being held up highlights the difficulty that centralized crypto companies are facing now that Silvergate is no longer providing them with round the clock banking services.

The crypto space is now awaiting a Federal rescue plan from the FDIC, and the outcome of the situation will have broader implications for business, banking and entrepreneurs.

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