USDC Stablecoin Depegs From $1 After Silicon Valley Bank Collapse

    The value of USDC fell off the $1 mark after the parent company Circle admitted to relating to Silicon Valley Bank.

    Accordingly, Circle said the amount affected by the collapse of Silicon Valley Bank was $ 3.3 billion, accounting for 8.25% of total assets—$ 40 billion in collateral for USDC, much higher than previous predictions.

    Circle said it will continue to monitor the situation and the handling of the US government to withdraw the assets.

    Coinbase then announced to stop converting USDC back to USD because it was a weekend in the US. Until Monday, when the bank reopens, the exchange will continue to allow to convert of USDC to USD exchange. Coinbase is committed to ensuring the safety of users’ assets.

    The price of USDC/USDT fell to $0.9364 on Coinbase as investors rushed to jump from USDC to USDT when it was no longer possible to convert directly to USD. This is the lowest price threshold since the stablecoin was gone live in 2018.

    As the latest news, the event that has attracted the most attention in the US stock market and the cryptocurrency space today is the rapid collapse of Silicon Valley Bank, the 16th largest commercial bank in United States, managing assets of more than $200 billion. It was the biggest bank failure in the US since the 2008 financial crisis.

    The impact of above event has not been fully quantified yet, because of the risk of having a knock-on effect on other large banks, as well as individuals and businesses depositing money at Silicon Valley Bank. Particularly in the crypto market, the community is also highly concerned with the prospect of crypto companies holding money above. Silicon Valley Bank is a name specializing in providing services to technology startups and investment funds in Silicon Valley – the technology and advancement center of the United States.

    As soon as the news broke, Binance exchange, stablecoin company Paxos, stablecoin company Tether and Bybit exchange stated that they were not involved with Silicon Valley Bank or Silvergate Bank, another “crypto-friendly” bank that also shut down last week. Meanwhile, the bankrupt crypto company BlockFi admitted to still holding $227 million in Silicon Valley Bank.

    Subsequently, Circle – the owner of the second-largest stablecoin in the world USDC – with a market capitalization of $43.4 billion, confirmed that it has a partial deposit of collateral cash on Silicon Valley Bank.

    According to updated information from Circle’s website, the company holds $43.5 billion in collateral for USDC, of ​​which $11.1 billion is in cash. Thus, 25% of that figure is approximately $2.7 billion held in six banks including Silicon Valley Bank. The company did not disclose the specific amount. 

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