The stablecoin USDC has nearly regained parity with the U.S. dollar after rising just above $0.99 on March 12, 2023, at 7:20 p.m. Eastern Time. The stablecoin jumped back to the $0.99 range after the U.S. Federal Reserve revealed it would bail out depositors of California’s Silicon Valley Bank (SVB) and New York’s Signature Bank. Following the Fed announcement, Circle CEO Jeremy Allaire said on Twitter that the company would rely on BNY Mellon to settle the process of minting and redemption.
Signature Bank Closure Forces Circle to Rely on BNY Mellon for USDC Minting and Redemption Settlements
At 8:45 p.m. Eastern Time on Sunday, March 12, 2023, the stablecoin usd coin (USDC) is trading at $0.998 per unit after jumping above the $0.99 range at around 7:20 p.m. Three minutes after the stablecoin returned to the $0.99 region, Circle CEO Jeremy Allaire tweeted that USDC operations would resume on Monday.
The announcement follows the U.S. Federal Reserve’s disclosure that it established a backstop entity called the Bank Term Funding Program (BTFP) to assist banks facing liquidity challenges. The central bank of the United States also stated that all depositors of Silicon Valley Bank (SVB) and Signature Bank would be fully compensated.
This means Circle Financial won’t lose funds because the bailout will make depositors whole, but Circle does lose a banking partner with Signature being shut down by New York regulators.
“We were heartened to see the U.S. government and financial regulators take crucial steps to mitigate risks extending from the fractional banking system,” Allaire said in a statement. “All deposits from SVB are 100% secure and will be available at banking open tomorrow.”
Allaire added:
100% of USDC reserves are also safe and secure, and we will complete our transfer for [the] remaining SVB cash to BNY Mellon. As previously shared, liquidity operations for USDC will resume [as] banking open[s] tomorrow morning.
The Circle CEO also commented on the Signature Bank issue, as Circle had previously used the company’s Signet service, which facilitated settlements between USDC and USD. Signature Bank’s Signet is a similar service to Silvergate Bank‘s now-defunct SEN network. “With the closure of Signature Bank announced tonight, we will not be able to process minting and redemption through Signet. We will be relying on settlements through BNY Mellon,” Allaire said in his Twitter statement.
In addition to USDC, several other top stablecoins, including DAI, USDD, USDP, GUSD, LUSD, and FRAX, also returned to the $0.99 range after depegging over the past weekend. As of March 12, the stablecoin economy is valued at $135.85 billion, following the market confidence bolstering stablecoin values. Moreover, stablecoins account for most of the global trade volume at the moment, with $71.78 billion out of the day’s $88.82 billion in crypto swaps.
Tags in this story
BNY Mellon, Circle CEO, crypto swaps, Cryptocurrency, DAI, depegging, Economy, Fed, Federal Reserve, Financial regulators, fractional banking system, FRAX, Global Trade Volume, GUSD, Jeremy Allaire, liquidity operations, LUSD, market confidence, Market Values, minting, potential, public statement, redemption, reserves, risks, SEN network, Settlements, Signature Bank, Signet, Silicon Valley Bank, Stability, Stablecoin, Twitter, US Central Bank, USD, USDC, USDD, USDP
What are your thoughts on USDC nearly regaining its parity with the U.S. dollar after the Fed announcement? Share your opinions in the comments section below.
Jamie Redman
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
More Popular NewsIn Case You Missed It
