The price of the stablecoin USDC has nearly returned to par amid statements from regulators and the coin’s issuer — Circle.
Circle’s USDC operations will open for business on Monday morning, including with new automated settlement via our new partnership with Cross River Bank. https://t.co/ybkSEedzrC
— Jeremy Allaire (@jerallaire) March 13, 2023
On March 11, the ‘stablecoin’ lost its peg to the dollar in the United States after authorities closed Silicon Valley Bank (SVB). Circle held $3.3 billion in reserves at the institution — about 8% of collateral.
Regulators also shuttered the crypto-friendly Signature Bank. Circle said that the institution used for issuing and redeeming USDC would be replaced by BNY Mellon and another unnamed partner.
According to the company’s statement, no USDC reserves were held at Signature Bank.
“Trust, security and the ability to redeem all USDC in circulation at a 1:1 ratio are paramount for Circle. Even in the face of contagion among banks affecting the crypto industry,” said Circle co-founder and CEO Jeremy Allaire.
He welcomed the authorities’ actions, calling them a reduction in risks tied to the banking system. Regulators allowed the transfer of the company’s funds from SVB to BNY Mellon.
100% of USDC reserves are also safe and secure, and we will complete our transfer for remaining SVB cash to BNY Mellon.
As previously shared, liquidity operations for USDC will resume at banking open tomorrow morning.
— Jeremy Allaire (@jerallaire) March 12, 2023
At the time of writing, USDC was trading above $0.98. The U.S. East Coast trading day would begin in a few hours.
According to Circle, 77% ($32.4 billion) of stablecoin reserves consist of short-term US Treasury securities — among the most liquid financial instruments.
PeckShield experts noted that on March 13 the issuer minted nearly 500 million USDC.
#PeckShieldAlert ~479.8M $USDC has been minted @circle https://t.co/1WfF2INoEe pic.twitter.com/fcOx7bjTT1
— PeckShieldAlert (@PeckShieldAlert) March 13, 2023
Earlier, Allaire assured that the company would cover any shortfall in the collateral backing the stablecoin.
As reported, due to the depegging of USDC from the dollar, a number of algorithmic stablecoins such as DAI and FRAX lost their peg.