The issuer of USDC, Circle, gained access to $3.3 billion in deposits at the collapsed Silicon Valley Bank (SVB).
A window into the past several days, and the core macro risks from banking sector. @SquawkCNBC https://t.co/nqvwsWt4Vf
— Jeremy Allaire (@jerallaire) March 14, 2023
CEO of the platform Jeremy Allaire, in a CNBC interview, pointed to the irony of a situation in which a traditional bank harms the crypto economy, and not the other way around, as regulators stated.
“We are really trying to ensure that we have the most reliable infrastructure for [USDC]. It is somewhat ironic that there was much talk about protecting the banking system from cryptocurrency, and now we find ourselves in a situation where we must protect the digital dollar from these very banks,” he explained.
He also praised the U.S. government and financial regulators for “important steps to reduce risks.”
Update thread on USDC
We were heartened to see the US government and financial regulators take crucial steps to mitigate risks extending from the fractional banking system.
100% of deposits from SVB are secure and will be available at banking open tomorrow.
— Jeremy Allaire (@jerallaire) March 12, 2023
“100% of deposits at SVB are safe and will be available on March 14 when the bank opens,” said the CEO of Circle.
Allaire also said that the company had moved its available reserves to a secure custodian — Bank of New York Mellon.
On March 10, California’s Department of Financial Protection and Innovation closed Silicon Valley Bank and named the FDIC as receiver. The reason for the decision was “insufficient liquidity and insolvency.”
US regulators stated that depositors would gain access to their deposits on March 13, at the expense of shareholders and some holders of unsecured debt. These measures also affected Signature Bank, which, together with Silvergate, was one of the main banks for participants in the crypto industry.
On March 11, in the wake of SVB’s collapse, the stablecoin USDC and the algorithmic stablecoins DAI and FRAX lost their peg to the US dollar. Later, Circle assured it had resolved issues with bank custody of the asset.
Circle’s stake in SVB accounted for about 8% of the total cash reserves of $42.1 billion underpinning the value of the stablecoin.
Earlier, representatives of the USDC issuer and the cryptocurrency exchange Coinbase accused banks of destabilising the market for digital assets.