Circle, the stablecoin issuer, has been able to access its $3.3 billion of funds held with the collapsed bank, Silicon Valley Bank, according to Circle CEO and co-founder Jeremy Allaire. Allaire told Bloomberg Markets on March 14 that he believed that “if not everything, very close to everything was able to clear” from the failed lender.
The news of the temporarily locked funds had a significant effect on USD Coin (USDC), the stablecoin issued by Circle. USDC briefly de-pegged following the news, and mass redemptions of USDC have resulted in the market cap of the stablecoin dropping by nearly 10% since March 11, according to TradingView. Meanwhile, throughout the same timeframe, USDC peer Tether (USDT) has recorded a slight increase in its market cap since March 11, climbing by over 1% to $73.03 billion.
The temporarily locked funds represented less than 8% of USDC’s reserves, according to its January reserve report released on March 2. The report asserted USDC was over 100% collateralized with over 80% of the reserve consisting of short-dated United States Treasury Bills — highly liquid assets that are direct obligations of the U.S. government and considered one of the safest investments globally.
Circle’s ability to access its funds held with Silicon Valley Bank is a positive sign for the stablecoin issuer, and it is likely that the market cap of USDC will continue to recover in the coming days.