• Circle announced that it will back its stablecoin USDC with corporate resources if needed.
• USDC temporarily traded for less than its $1 peg on March 11, and is currently trading at $0.95.
• The unexpected closure of Silicon Valley Bank (SVB) sparked the need for this strategy.
Circle Announces Corporate Backing for USDC Stablecoin
Circle has pledged to back its stablecoin, USDC, with corporate resources should the need arise. The news comes after the stablecoin temporarily traded for less than its $1 peg on March 11, and is currently trading at $0.95 at the time of writing. This announcement was made in response to the unexpected closure of Silicon Valley Bank (SVB).
Unexpected Closure of SVB
The California regulators closed down SVB on Friday, which served as a go-to financial institution for Silicon Valley’s venture investors and early-stage entrepreneurs. It’s been reported that Circle had major exposure to the failed bank, although it wasn’t as concerning as the Silvergate case. As a result of this closure, Circle has developed a strategy to draw into its „corporate resources“ to make up for any deficit in its reserves and keep the USDC pegged to one dollar.
USDC Recovery Strategy
On Monday when regular operations at U.S financial institutions are likely to resume again, Circle said that it would seek more money from other sources should there be a need for it and that it also attempted to move its assets before SVB went bust . Circle has also said that they will once again be exchangeable for dollars at a rate of one-to-one beginning on Monday if their reserve holds out or not.
Crypto Community Reactions
Many in the crypto world were astonished to find out about Circle’s involvement with SVB and have expressed concerns over whether such an event could happen again or not. Despite these concerns however, due to Circle’s announcement regarding their backup plan involving corporate resources, investor confidence seems returning gradually when looking at current price numbers..