Circle CEO Jeremy Allaire is speaking out for the first time following USDC‘s depeg from the dollar, which saw over $6.3 billion disappear from the second-largest stablecoin’s market cap.
In a new company update also posted to Twitter, Allaire says that USDC is still redeemable for dollars on a 1 for 1 basis.
USDC lost its peg from the dollar early on Saturday morning following news that Circle had $3.3 billion of its $40 billion reserves in Silicon Valley Bank (SVB), a collapsed bank now under the control of the Federal Deposit Insurance Corporation (FDIC).
USDC went as low as $0.84 during the revelation, and his since almost recovered its peg, trading at $0.97 at time of writing.
DAI, which is partially backed by USDC, also depegged from the dollar before recouping most of its losses.
Circle addresses the possibility that SVB may not return all the funds to its depositors, or that the FDIC’s dealings with the bank may be delayed, consequentially putting a dent in Circle’s reserves.
According to the Allaire, Circle will use its own resources and external capital if needed to cover the shortfalls.
“SVB has a strong franchise that is at the center of American entrepreneurship and technology industry growth. We are hopeful that the FDIC as receiver will seek a rapid purchase and assumption of a franchise as strong as SVB’s to ensure all depositors are made whole.
However, it is also possible that SVB may not return 100% and that any return might take some time, as the FDIC issues IOUs (i.e., receivership certificates) and advanced dividends to deposit holders.
In such a case, Circle, as required by law under stored-value money transmission regulation, will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.”
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