Issuer Circle plans to use "corporate resources" to cover the shortfall on its reserves following Silicon Valley Bank's shutdown, said the company in a statement on March 11.
According to Circle, USDC liquidity operations will "resume as normal when banks open on Monday morning in the United States," enabling USDC redemption at 1:1 with the U.S. dollar.
The announcement came after the stablecoin lost its $1 peg on March 11 to trade as low as $0.87 before slowly re-pegging at $0.98 at the time of publication. The stablecoin lost its peg after the disclosure of $3.3 billion of Circle's reserve at Silicon Valley Bank.
USDC is the second-biggest stablecoin, with a market cap of over $42 billion as of January 31, serving as collateral for many stablecoin ecosystems. Its depeg had an immediate effect on other stablecoin ecosystems.
Relief efforts were underway less than 72 hours after the collapse of American tech bank, it was reported. According to Bob Elliot, chief investment officer of Unlimited Funds, "big banks actively working on buying svb business." The U.S. Federal Deposit Insurance Corporation (FDIC) will cover 95% of uninsured deposits to the acquirer, and that "50pct of uninsured paid out next week."
According to Circle's latest audit report from January, USDC is 100% backed by cash and U.S. Treasuries, with nearly $8.6 billion held by U.S. banks as of Jan. 31, representing roughly 20% of its reserves. Another $33 billion of its reserves are held in U.S. Treasuries managed by BlackRock through the Circle Reserve Fund, registered as a government money market fund and custody by BNY Mellon. Circle’s January report was reviewed and certified by Big Four accounting firm Deloitte.