- The crash of Silvergate and Silicon Valley bank has put both crypto holders and traditional investors at risk of incurring major losses.
- Circle, the peer-to-peer payments technology company that manages the popular stablecoin USDC, has disclosed that a significant amount of USDC reserves is still under the possession of Silicon Valley Bank.
The cryptocurrency market and the broader fintech industry are facing a long and uncertain weekend due to the recent crash of Silvergate and Silicon Valley bank. The crash has caused both crypto holders and traditional investors to risk significant losses. For USDC stablecoin holders and traders, the market is presenting a lot of speculation on whether or not users’ funds are safe.
Circle, the peer-to-peer payments technology company that manages the popular stablecoin USDC, has disclosed a concerning announcement regarding USDC reserves. According to Bitcoin.com, “the firm has taken to Twitter to explain that a significant amount of USDC reserves is still under the possession of Silicon Valley Bank.” Circle has revealed that although $40 billion worth of USDC was moved, the wires put in place to evacuate the remaining $3.3 billion have yet to be processed.
Circle has acknowledged the importance of Silicon Valley Bank, stating that it is of major significance to customers and depositors who look to it for banking services. The company, along with other fintech firms, has appealed that the continuity of the bank is vital to the economy of the United States. Circle maintains that it will adhere to the guidance provided by state and Federal regulators should regulatory bodies allow for SVB to continue market activities in the future.
“Meanwhile, leading cryptocurrency exchanges like Binance and Coinbase have halted USDC:USD conversions for the rest of the weekend, as banks close for the week,” reports Bitcoin.com. Both exchanges have temporarily paused USDC:USD and USDC to BUSD conversions due to unfavorable market conditions and the risk-management procedure required in such circumstances.
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A Twitter user has revealed the locations of USDCs across different platforms, stating that “USDC has 11.4b split between 7 banks. Two were SVB and SI. BNY Mellon likely holds the majority of assets (it’s safest, if they wanted yield they’d be in treasuries). If 20% is in SVB and haircut on SVB is 92% (aggressive) then backing of USDC is cut by 182m, which is easily absorbed by CB balance sheet.”
According to Bitcoin.com, “at press time, USD Coin (USDC) is trading at a price of $0.89, after losing over 7% in price value in the last 24 hours, as well as the last 7 days.” The uncertain situation has caused significant concern for USDC stablecoin holders and traders, as well as the broader fintech industry.
In conclusion, the uncertainty surrounding the USDC stablecoin has left crypto holders and traditional investors alike concerned about potential losses. Circle’s announcement regarding the possession of USDC reserves by Silicon Valley Bank has caused significant speculation about the safety of users’ funds. With Binance and Coinbase temporarily halting conversions, the future of USDC remains uncertain.
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