USDC, a type of digital token like money, got very close to being equal to the U.S. dollar when it rose above 99 cents on March 12th (7:20 p.m. Eastern Time). This happened because the Federal Reserve agreed to help out depositors from two banks in California and New York which caused the price of the USDC to go up again. Jeremy Allaire, who is CEO of Circle, said that the company will use BNY Mellon for settling transactions with this token.
USDC Reaches Dollar Parity Amid Bank Term Funding Programs and Silvergate Banking Changes
At 8:45 PM Eastern Time on Sunday, March 12, 2023 the stablecoin usd coin (USDC) was trading for $0.998 which went up from the $0.99 range around 7:20 PM. Circle CEO Jeremy Allaire tweeted that USDC operations would start back up again on Monday after three minutes of it being in the $0.99 region.
The U.S. Federal Reserve recently revealed that it created the Bank Term Funding Program (BTFP) to help banks with money problems. The central bank also said that everyone who has savings at Silicon Valley Bank (SVB) and Signature Bank will be given back all their money.
Circle Financial didn’t lose money because the government is helping to refund deposits, but they did lose their banking partner, Signature. The CEO of Circle, Allaire said in a statement that all deposits from SVB are safe and available to use. He added:
“All the reserves for USDC are safe and secure. We’re transferring what’s left of the SVB cash to BNY Mellon once banks open tomorrow. So, when that is done, we can get back to our normal operations with USDC.”
The CEO of Circle mentioned the Signature Bank’s closure. Before that, Signature Bank had a special service called Signet which Circle used to help turn USDC and USD into other currencies. Signet works in the same way as SEN network from Silvergate Bank did before they stopped it working. Allaire said on Twitter that now that Signature Bank is closed, they won’t be able to use Signet anymore, so instead they will have to do settlements with BNY Mellon.
Over the past weekend, six different stablecoins including USDC, DAI, USDD, USDP, GUSD and LUSD all reached the same value of $0.99 – a sign that people had faith in their values! In fact, these coins together make up the whole ~$135 billion stablecoin economy which makes up most of today’s crypto trading activity at around $71.78 billion out of a total $88.82 billion!
The USDC recently got really close to the same value as the U.S. dollar after the Federal Reserve said something about it. Let us know what you think about this situation below in the comments section!