- At the time of writing, the value of the stablecoin is hovering around $0.91.
- The balance of USDC reserves is held in the Circle Reserve Fund
- Binance and Coinbase say they are suspending USDC conversions
Stablecoin USDC lost peg to the dollar after Circle revealed it was holding $3.3 billion of its reserves (out of $40 billion) in troubled Silicon Valley Bank.
On Thursday, March 9, Circle tried to withdraw its funds from Silicon Valley Bank as it was about to go out of business. However, two days later, on March 11, the company confirmed that the bank transfer had not been fully processed and USDC reserves of $3.3 billion were still in SVB.
Against the backdrop of this news, the coin lost its peg to the dollar and decreased in price by 10%:
Circle chief strategist Dante Disparte believes SVB will play a critical role in the US economy.
“A bank failure without a federal bailout plan would have serious consequences for business, banking and entrepreneurs,” Dante said.
He added that the issuer tried to protect the stablecoin from the collapse of the “black swan” in the banking system. According to him, the balance of USDC reserves is kept in the Circle Reserve Fund.
And two weeks ago, Circle announced that it plans to increase its staff by 25%. Then the CFO hinted at plans to prepare a new application for entering the stock market.
