In an interview on Tuesday, Circle’s boss Jeremy Allaire pointed out the irony of the traditional banking system disrupting the broader crypto industry. Allaire said there had been talks about shielding the banking sector from crypto for years, but that has changed. Now Crypto players are trying to safeguard a digital dollar from the traditional banking system.
The Circle boss, however, acknowledged the efforts of the US government to help banks like Silicon Valley Bank that are facing liquidity problems by availing more than $25 billion.
Although USDC has regained its dollar peg, Allaire claimed Circle was prepared to go the extra mile, including using its corporate balance sheet to ensure the firm’s stablecoin was priced at $1. Fortunately enough, that wasn’t needed.
The Circle CEO said they had taken several precautions last week when they began to see numerous things unfold. Allaire explained that Circle moved most of the USDC cash reserves to the Bank of New York Mellon, calling the bank an ‘extraordinary custodian’.
However, around $3.2 billion of the cash reserves were still stuck at Silicon Valley Bank. When Circle made the matter public, investors started to express concerns; as a result, USDC went below the $0.88 mark, levels it had never hit since 2019.
USDC Issuer Resumes Operations After Recovering Funds
Circle’s funds that were stuck in Silicon Valley bank accounted for only 7.5% of the total USDC cash reserves. The firm reported yesterday that the money was now fully available, insisting that USDC, which is a regulated payment token, continues to be redeemable 1:1 with USD.
On Monday, Circle shared details regarding USDC reserves, explaining that the stablecoin is collateralized 77% with short-term US Treasury Bills and 23% with cash which is now entirely deposited at the Bank of New York Mellon.
Circle Announces New Plans
In a press release, Circle announced plans for automated USDC minting and new banking partners to help customers redeem the stablecoin.
One of the institutions tapped by Circle is Cross River Bank. It is a financial service organization based in New Jersey and offers technology infrastructure to tech firms, including the leading crypto exchange in the US, Coinbase.