Stablecoin USDC breaks dollar peg after revealing $3.3 billion Silicon Valley Bank exposure

• Circle confirms availability of $3.3B held with Silicon Valley Bank stock after collapse, effective Monday with U.S. banks opening.
• USDC's $1 peg, lost post-SVB's collapse, is expected to recover as funds become fully available.
• Regulatory intervention leads to cryptocurrency market rally with Bitcoin surging over 10% and crossing $22k threshold.

In response to Circle, the stablecoin's issuer, stating that the $3.3 billion it held with the now-defunct Silicon Valley Bank will be "totally accessible" when U.S. banks open, USD Coin (USDC) came dangerously close to restoring its dollar peg on Monday.

A stablecoin is a sort of cryptocurrency that is designed to be tied one-to-one with the U.S. dollar, and USDC is one such stablecoin. The second-largest stablecoin in existence after tether, it is backed by real assets like as U.S. Treasury's and cash.

On Thursday, Circle revealed that SVB was the owner of its $3.3 billion cash reserve. According to CoinDesk statistics, USDC's value fell precipitously after the bank's failure and reached a low of 86 cents on Saturday, below its $1 fixed value.
According to Circle, it currently has a cash reserve of approximately $9.7 billion, with $5.4 billion of that sum now being held by BNY Mellon.

The company declared that the entire USDC reserve deposit of $3.3 billion, which was held at Silicon Valley Bank, will be available to the public on Monday once U.S. banks reopen.

According to CoinDesk data, USDC was on the verge of recovering its peg, hovering just below the $1 mark at approximately 99 cents on Monday following Circle's assurance.

Following the U.S. regulators' decision to shut down SVB and take over its deposits, which marked the most significant banking failure since the 2008 financial crisis, Circle made its announcement. On Sunday, the U.S. Treasury, Federal Reserve, and Federal Deposit Insurance Corporation confirmed that depositors of SVB would be able to access all of their funds beginning on Monday.

Jeremy Allaire, CEO of Circle, commended the government's intervention in the SVB crisis. In addition, Circle confirmed that USDC can be redeemed at a rate of 1-to-1 with the U.S. dollar and revealed a new partnership with Cross River Bank for USDC issuance and redemption.

The CEO of Circle, in a press release, commended the U.S. government and financial regulators for their critical measures in addressing the risks emanating from the banking system.

The last few days have witnessed the collapse of a few technology and cryptocurrency-focused lenders, with SVB being the latest. Silvergate Capital, a major lender to the crypto industry, announced on Wednesday that it is winding down operations and liquidating its bank.

In order to avoid the banking sector being affected by contagion, U.S. regulators shut down Signature Bank, another crypto lender, on Sunday. Circle confirmed that it had no cash reserves at Signature Bank. The cryptocurrency market as a whole surged on Monday following the intervention of regulators, with Bitcoin rising by up to 10% and crossing $22,000.