On Friday (March 10), Californian regulators closed Silicon Valley Bank (SVB) — due to a capital crisis and a bank run — and placed it under the control of the US Federal Deposit Insurance Corporation (FDIC).
SVB has $175 billion in deposits, 89% of which is uninsured. According to a report by Reuters, the FDIC is “racing to find another bank over the weekend that is willing to merge with Silicon Valley Bank, according to people familiar with the matter who requested anonymity because the details are confidential.”
The first announcement by USD Coin (USDC) issuer Circle was that SVB was one of the six banks holding 25% of the cash reserves behind USDC.
Around three hours later, Circle said that $3.3 billion of USC’s $40 billion reserves are still at SVB, and presumably, the vast majority of these funds are uninsured:
Roughly 30 minutes later, Coinbase announced that it had decided to pause USDC-USD conversions over the weekend:
Within around four hours of Circle’s disclosure, on crypto exchange Bitstamp, USDC fell to as low as $0.8102:
The panic surrounding USDC seems to have helped much bigger rival USDT:
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