- Advertisement -
popular stablecoin usdc Its $1 peg price is back after regulators in the US assured depositors at Silicon Valley Bank (SVB) access to their money today.
The government’s assurance meant that all Silicon Valley Bank depositors would be made whole, despite the bank’s collapse and the wipeout of investors’ money. The USDC issuer was among the depositors at Circle Bank, and stands Bank collapse caused losses of around $3.3bn,
Circle’s total reserves for USDC at the time were around $40bn, but losses in SVB were still significant enough to cause a temporary de-peg for USDC. On Saturday and Sunday, USDC traded in the $0.90 to $0.95 zone for a long period.
By Monday morning, USDC had regained its peg after Circle promised USDC tokens can still be redeemed for $1Even if the company needs to finance it with outside capital.
,[Circle] will stand behind USDC and cover any shortfall using corporate resources, including invoking outside capital if necessary,” the company said in its statement.
Dai Dee-Peg…and Heals Up
Decentralized Stablecoin With USDC Recovery MidwifeAlso pulled back on Sunday and Monday, partially supported by USDC. The dollar-pegged token fell on Saturday to around the $0.90 level along with USDC, but has since traded towards the $1 level.
At the time of writing, according to data from CoinGecko, DAI is trading at $0.999, up 3.2% over the past 24 hours.
regulatory action
Both stable currencies recovered after US regulators intervened on Sunday and promised that depositors at the bank would have access to all their funds despite the closure of the banks. This has helped the market regain confidence in the coins, sending them back to their $1 peg value as of press time.
the promise came as a joint statement From the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC). All three regulators said they hope to “protect the US economy by strengthening public confidence in our banking system”.
The Fed Makes “Excess Money” Available
separate later statement The Federal Reserve said the central bank would make “additional funds” available to banks to ensure they have the capacity to honor withdrawals.
“Additional funding will be made available through the creation of a new Bank Term Funding Program (BTFP), which will allow banks, savings associations, credit unions and other qualified depository institutions to offer loans with terms of up to one year to the US Treasury, the agency loans and mortgage-backed securities, and other eligible assets as collateral,” the Fed statement said.
The congregation is “enthusiastic” to see government action
In a comment posted to Twitter, Circle CEO Jeremy Allaire said he was “delighted” to see the government taking action. He noted that 100% of deposits at SVB are safe and available, and added that his company will not transfer its deposits at SVB to BNY Mellon.
“We are committed to building a robust and automated USDC settlement and reserve operation with the highest quality and transparency,” said Circle CEO.
