In an official statement, Circle, the USDC issuer, stated that it will resume normal operations from Monday and that the stablecoin will be redeemable against USD. This comes after the company put in place a plan to use “company resources” to cover any shortfall in its reserves following the sudden closure of the bank on March 11.
The department may use external funding
According to the official blog mail The company, which was reported by Circle, stated that if the bank fails to return the necessary cash holdings, it will back up its stablecoin by covering it with the company’s resources. In addition, Circle has also announced that it will seek external funding should such a scenario arise.
Read More: Bitcoin Price Unfazed by USDC Stablecoin Crisis, Signs Incoming Uptrend
The announcement came after the stablecoin fell below its peg to the US dollar on March 11 and traded as low as $0.87 before gradually re-pegging itself at $0.97 at the time of writing. Shortly after Circle disclosed the existence of $3.3 billion in USDC reserves in a Silicon Valley bank, the USDC price separated from its original price of $1 on Friday.
Share an update on USDC and Silicon Valley Bank. https://t.co/Ug3qpot8sJ
— Jeremy Allaire (@jerallaire) March 11, 2023
The circle attempted to withdraw before collapsing
Circle stated that it made an effort to transfer its assets prior to SVB’s bankruptcy and that the transaction could be completed on Monday, when normal operations at US financial institutions are expected to resume. The company was quoted as saying:
We have reason to believe that under applicable FDIC policy, transfers initiated prior to the bank’s entry into receivership (bankruptcy) would have been processed normally.
The popular Silicon Valley bank, which has been a favorite of venture capitalists and early-stage startups, was shut down by the California Financial Protection Administration on Friday. Although it wasn’t as alarming as Silvergate’s situation, many in the cryptocurrency community were shocked to learn that Circle was highly exposed to the bankrupt bank.
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