- Circle has pledged to back its stablecoin with corporate resources if required.
- The stablecoin is gradually recovering to trade at $0.95 at the time of writing.
Circle, the company behind the USDC, said in a statement that the stablecoin will once again be exchangeable for dollars at a rate of one-to-one beginning on Monday. As a result of the unexpected closure of SVB on March 11, the company has developed a strategy to draw into its “corporate resources” to make up for any deficit in its reserves.
Circle has pledged to back its stablecoin with corporate resources in the event that the bank fails to release the required cash holdings, according to a company blog post. Circle has also said that it would seek more money from other sources should the need arise.
Gradually Recovering
The news was made after the stablecoin temporarily traded for less than its $1 peg on March 11. It dipped as low as $0.87 before gradually recovering to trade at $0.95 at the time of writing. On Friday, the USDC’s price depegged from its initial $1, shortly after Circle said that $3.3 billion in USDC reserves was kept at Silicon Valley Bank.
Circle has said it attempted to move its assets before SVB went bust, and the deal might be concluded on Monday when regular operations at U.S. financial institutions are likely to resume.
On Friday, the California regulators closed down the prominent Silicon Valley Bank, the go-to financial institution for Silicon Valley’s venture investors and early-stage entrepreneurs. Many in the crypto world were astonished to find that Circle had major exposure to the failed bank, albeit it was not as concerning as the Silvergate case.
