As of March 13, the stablecoin issuer has been “able to access” its $3.3 billion in money held at the defunct Silicon Valley Bank, according to Circle CEO and co-founder Jeremy Allaire (SVB).
On March 14, Allaire told Bloomberg Markets that he thought “if not everything, very close to everything was able to settle” from the defunct lender.
As soon as it was revealed that $3.3 billion of Circle’s cash reserves were stranded on SVB, USD Coin (USDC), the stablecoin that the company has released, suddenly lost its peg.
The dollar peg of the stablecoin has already been restored, but according to TradingView, widespread USDC redemptions have caused the stablecoin’s market cap to fall by about 10% since March 11.
From March 8 to March 14, the USDC market cap. the TradingView website
Tether (USDT), a USDC peer at the same time period, has seen a minor increase in market cap since March 11, rising by more than 1% to $73.03 billion.
Given that the $3.3 billion constituted less than 8% of the token’s holdings as of its January reserve report, which was made public on March 2, the temporarily locked money had a substantial impact on USDC.
Cryptography makes it impossible to know for sure, but it seems to be working.
Circle’s reserves are stuck by 8.25%… 91.75% of their funds are still available. Even if all money is lost, Coinbase will intervene to restore it. The #USDCMarket’s response appears to be pure panic driven by recent events… https://t.co/vs1junbFys
— tedtalksmacro (@tedtalksmacro) March 11, 2023
The study claimed that USDC was over 100% collateralized, with short-dated US Treasury Bills accounting for over 80% of the reserve. These highly liquid assets are regarded one of the safest investments in the world because they are direct obligations of the US government.