Circle, the company behind USD Coin (USDC), said it would “close any gaps” even if it lost all of the $3.3 billion in cash reserves trapped in Silicon Valley Bank. After the ‘assurance’ statements from the stablecoin company, USDC and these coins are collecting volume.
Circle ready to close the gap despite stuck reserves in SVB
Circle Internet Financial said on Saturday it would “close any gap” in USDC-backing assets if it did not acquire the full $3.3 billion in cash reserves it held at Silicon Valley Bank.
In a blog post, Circle said it will “stand behind USDC and close any gaps using institutional resources, including external capital if needed.” cryptocoin.comAs we reported, Circle’s announcement that it had lost some of its cash reserves in the SVB caused the USDC price to fluctuate.
Sharing an Update on USDC and Silicon Valley Bank. https://t.co/Ug3qpot8sJ
— Jeremy Allaire (@jerallaire) March 11, 2023
Circle’s reassurance came as crypto traders worried about the value of USDC, which should have been pegged to the US dollar but fluctuated after the collapse of Silicon Valley Bank. Circle was holding USDC’s $3.3 billion in cash backing at Silicon Valley Bank when the FDIC seized the bank’s assets on Friday.
Circle said it was trying to issue assets before the SVB collapsed and the transaction could take place on Monday, when US banks resume normal operations. “However, it is also possible that the SVB may not yield 100% returns, and any return may take some time, as the FDIC issues advance dividends to IOUs (i.e. liquidation certificates) and depositors,” the company said.
USDC rallies as Circle designs new strategy to close the gap
During the announcement shared by CEO Jeremy Allaire on his Twitter account, the USDC price is regaining its dollar stability. The second-largest stablecoin lost $1 on March 11, falling to $0.97 and then gradually to $0.87. The surges first occurred on Friday, when Circle announced that it holds $3.3 billion in USDC reserves at Silicon Valley Bank.
USDC price supported by $2.34 billion burn
USDC has now recovered to around $0.99 after a significant drop, according to current analysis from blockchain analytics platform Nansen. This update comes after the news that Circle burned an incredible $2.34 billion USDC token in just 24 hours.
The burning and printing of USDC tokens by the Circle has also raised concerns about the transparency of stablecoins. Critics argue that the lack of regulation in its market can lead to potential fraud or market manipulation.
Currently, $USDC has recovered to ~$0.97
UPDATE: Circle burned $649.3 million $USDC and minted $16.7 million in the last 24 hours
It has slowed down significantly from the previous day pic.twitter.com/Znn6A45bWi
— Nansen 🧭 (@nansen_ai) March 12, 2023
Stablecoins regain their saved volumes
While USDC has reclaimed price stability, it has made up for much of the volume it lost in DAI, one of the largest members of the stablecoin market. According to CMC data, the stablecoins that have risen the most in the last 24 hours are as follows:
- DigixDAO (DGD): 46.06%
- Dynamic Set Dollar (DSD): 26.36%
- Phantom USD (FUSD): 1.71%
- One Cash (ONC): 7.5%
- USDEX (USDEX): 5.74%
