- USD Coin price drops after exposure to failed Silicon Valley Bank.
- Circle Internet Financial reassures users amid concerns over exposure.
- Stablecoin reserves are held across various banks, including Silicon Valley Bank
According to Bloomberg, the recent collapse of Silicon Valley Bank, one of the biggest bank failures in US history, has stirred the cryptocurrency market as Circle Internet Financial disclosed that $3.3 billion of its USD Coin reserves were still held at the failed institution.
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The news led to a drop in the price of the USD Coin as investors reacted to the exposure. USD Coin and other stablecoins are designed to maintain a 1-to-1 peg to highly liquid assets. However, with the recent exposure to Silicon Valley Bank, investors are understandably concerned.
Circle Internet Financial Ltd holds around $8.7 billion in cash, with most of the reserves held in a BlackRock-managed money-market fund which invests in three-month Treasuries and cash. The rest of the reserves, representing 25% of the total, is held across various banks, including Silicon Valley Bank. The circulating supply of USD Coin is around $40 billion, making it the second-largest token after Tether’s USDT.
Despite concerns about the exposure to the collapsed bank, Circle reassured users that its operations would continue normally. As other crypto companies denied any exposure to Silicon Valley Bank, Circle said that it was working on a response. While the collapse of Silicon Valley Bank has caused ripples in the market, the future of stablecoins and their pegs to highly liquid assets remains uncertain.
In other news, Bitcoin bulls exert superhuman attempts to defend the $20,000 support at any costs. This was on full show yesterday as Bitcoin fell to $19,000 before recovering to approximately $20,300. According to CoinGecko, the price of Bitcoin at the time of publication is $20,463.59 USD.
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