USDC Price Returned To 0.96 USD As Circle Addressed Collateral Asset Shortage

Key Points:

• Circle, a stablecoin issuer, has provided the most recent information on the status of USDC and Silicon Valley Bank.
• In terms of collateral, USDC is backed by USD 32.4 billion in short-term US Treasury bonds (maturity 1-3 months) and USD 9.7 billion in cash held by a number of institutions.

Circle’s CEO Jeremy Allaire, the business behind stablecoin USDC, made the latest update concerning USDC’s volatility yesterday and the direction of the approaching resolution on March 12.

While USDC is a 24-hour cryptocurrency, the assets underpinning it are kept in traditional banking and financial institutions and are subject to regulation hours. provisions of the legislation. When the US financial system reopens on Monday morning (US time), the exchange will stay at 1 USDC for 1 USD.

In terms of collateral, USDC is backed by USD 32.4 billion in short-term US Treasury bonds (maturity 1-3 months) and USD 9.7 billion in cash held by a number of institutions. The custodian for those bonds is BNY Mellon Bank, and the custodian is BlackRock Asset Management Group, both well-known brands in the American financial business. Circle is committed to the other bonds that have significant liquidity and are backed by the US government. Moreover, $9.7 billion in cash is kept by three banks: $5.4 billion by BNY Mellon, $3.3 billion by Silicon Valley Bank, and $1 billion by Consumers Bank.

Circle also understands that it may not be able to recover 100% of the money held by Silicon Valley Bank, and states that it will continue to fully support USDC by paying the deficit with company assets or outside cash if necessary. After falling to $0.87 on March 11, the price of stablecoin USDC rebounded to $0.96 owing to comforting words from Circle. USDC’s market value has dropped from 43.7 billion USD to 35.9 billion USD in the previous 24 hours, then rebounded to 39.5 billion USD at the time of writing.

Even if Circle is able to reclaim its assets and return to close to $1, the trust of a fraction of crypto projects and investors in the stablecoin has been seriously eroded in recent days. via. The “bank run” targeting stablecoins is expected to continue once Circle restarts USDC conversion to USD on Monday. If the corporation can not find a method to raise $3.3 billion soon to cover its collateral deficiency, the ratio of the shortfall to stablecoin capitalization will only increase, endangering this stablecoin’s long-term viability.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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