Giovanni Russo Circle Financial recently let everyone know about its digital currency, USDC. On Monday morning in the US, the company said that it would be ready to deal with a lot of business and will make sure their currency is protected. They might need help from outside sources to make this happen if needed.
USDC Stablecoin Assurance and Circumvention of Deficit via FDIC and Circle’s Reserves
On Saturday, Circle, the creator of USD Coin (USDC), told everyone that they were fully prepared to handle a large amount of volume on Monday. They mentioned Silicon Valley Bank (SVB) not working properly, but reassured that USDC is still backed with strong liquid resources. To make this certain, they announced on Monday that you can always convert 1 USDC = 1 U.S dollar.
USDC is a cryptocurrency that works on multiple blockchains all the time. However, according to Circle (a company related to this asset), it can only be made and used during U.S. banking hours. On March 11th, 2023 at 3:02 am, USDC value dropped to $0.877 per unit. After that announcement from Circle, the value rose by 10% and at 4:15 pm it was worth $0.971 each. Apart from USDC, there were five other cryptocurrencies which went away from their usual price of 1$.
Circle has $3.3 billion in cash reserves held at SVB, but the company moved it to other banks. They feel safe with the FDIC managing SVB, and are able to receive these funds. Before entering receivership, transfers were processed normally according to FDIC policy.
The FDIC (Federal Deposit Insurance Corporation) should let bank customers finish their transactions normally until they take over the failed bank.
Circle wants to make sure that their users won’t lose money if something bad happens, so they have promised to use their own corporate resources or even external capital (if needed) to cover the losses in a worst-case scenario. This is required by the law under stored-value money transmission regulation.
Do you have an opinion about what happened with Saturday’s stablecoin and Circle’s most recent change? Let us know in the comments section!
