USD Coin (USDC) is struggling to maintain its peg to the US dollar after revelations that some of the cash backing the top stablecoin is stuck in Silicon Valley Bank.
The Boston-based firm says $3.3 billion of the $40 billion backing USDC is locked in the collapsed bank, which is now controlled by the FDIC.
The revelation triggered a mass sell-off of the crypto asset, sinking the coin’s market cap by $6.3 billion overnight, with the coin trading at $0.91 at time of publishing.
Circle is joining a long list of companies who are calling for the US government to step in and save the bank, which is home to more than 2,500 venture capital firms.
“Like other customers and depositors who relied on SVB for banking services, Circle joins calls for continuity of this important bank in the U.S. economy and will follow guidance provided by state and Federal regulators.”
Silicon Valley Bank was shuttered on March 10th by the California Department of Financial Protection and Innovation after reporting a $1.8 billion loss from mainly selling US government bonds.
US bonds are thought to be a safe way for banks to diversify, but the Fed’s sharp interest rate hikes have sent their prices in a downward spiral.
USDC is the second-largest stablecoin on the market. According to Circle’s website, the stablecoins are fully backed by a reserve fund.
In addition to the cash assets, Circle has more than $30 billion in US treasuries in a fund managed by BlackRock.
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