Decoding USDC’s current status after an initial fall of 13%
- USDC is gradually regaining its $1 peg after the Circle CEO confirmed that its reserves are secure and that the company has new banking partners.
- Allaire lauded the efforts of the U.S. government and the Federal Reserve for its $25 billion funding program.
Circle’s stablecoin USD Coin (USDC) was regaining its $1 peg, at press time. This followed after CEO Jeremy Allaire confirmed that its reserves were secure and that the company had new banking partners lined up for banking beginning Monday morning.
At the time of writing, USDC was trading at $0.99, showing a surge of 5.3% within the last 24 hours.
Over the weekend, the price of USDC fell as low as $0.87 due to concerns about $3.3 billion in USDC reserves held at Silicon Valley Bank (SVB), which was closed down by the California Department of Financial Protection and Innovation on 10 March.
“100% of USDC reserves are also safe and secure, and we will complete our transfer for the remaining SVB cash to BNY Mellon. As previously shared, liquidity operations for USDC will resume at banking open tomorrow morning,” informed Allaire on Twitter.
Allaire lauds Fed’s Funding Program, bats for Stablecoin Bill
Allaire lauded the efforts of the United States government during the crisis. He appreciated the Federal Reserve for its $25 billion funding program to assist banking institutions like SVB that are facing liquidity challenges.
Allaire also batted for the stablecoin legislation, adding, “Indeed, the Payment Stablecoin Act, which remains a very active pursuit for Congress, would enshrine in law a regime where stablecoin funds would be held with cash at the Fed and short-term T-Bills.”
The Circle CEO further informed that following the collapse of crypto-friendly Signature Bank on 12 March, Circle will no longer be able to process USDC minting and redemption through SigNet, and will instead rely on settlements through BNY Mellon.
Allaire, however, stated that things will move quickly in this direction. He shared that Circle is about to bring to the table a new transaction banking partner, with automated minting and redemption possible as early as Monday.
Following the announcements made by the Federal Reserve, asset prices have risen significantly across the board, with the total crypto market cap now exceeding $1 trillion after a sharp drop to $961 billion on Saturday.
Following the shutdown of Silvergate and SVB, Signature was seen as the last remaining crypto-friendly bank in the United States, and it is now unclear what the major banking on-and-off ramps into crypto are.