Doubts still swirl around Circle
After the crisis intensified around the stablecoin USDC, the statement of the company “Circle” came to quell and calm the angry feelings.
The firm behind the stablecoin issuance, Circle, has told USDC that it will cover any shortfall caused by the $3.3 billion of its funds held by the collapsed Silicon Valley bank.
In a blog post, Circle writes that the company is legally obligated to stand behind the USDC and will cover any shortfalls using company resources and outside capital if necessary to ensure the stablecoin can be redeemed at a 1-for-1 dollar ratio.
Circle CEO Jeremy Allaire reiterated the commitment in a thread on Twitter:
On Friday, USDC lost its currency peg to the dollar after reports emerged that Circle had deposited its money in a Silicon Valley bank and disclosure that $3.3 billion in USDC cash reserves were held by the FDIC-acquired bank.
USDC price fell to $0.87, its lowest level since 2019, before regaining ground to currently trade at $0.97, according to CoinGecko.
Circle guarantees:
In its statement, Circle reiterated that USDC is 100% collateralized by cash and US Treasuries.
As a quote from the company's statement:
USDC is currently collateralized by 77% ($32.4 billion) held in US Treasuries (with a maturity of three months or less), and 23% ($9.7 billion) in cash held in a variety of institutions, among them the collapsed SVB bank.
The company's statement indicated that the remaining 23%, estimated at about $9.7 billion, is in the form of cash.
Looking forward to Monday:
As contagion from the collapse of SVB Bank continues to spread, Circle noted that while USDC is in play, US bank hours are restricting its issuance and redemption, stating that USDC liquidity operations will resume as normal when banks open on Monday.
From what the “Circle” company statement also stated:
In practice, our teams are well prepared to handle high volume, built on the strong liquidity and reserve assets previously discussed.
Hopefully, the FDIC will seek a speedy purchase with a full refund guarantee for all depositors' money.
Posted using Tribaldex Blog