The stablecoin issued by Circle, USDC, has nearly regained parity with the US dollar after rising just above 0.99 USD on March 12, 2023, at 7:20 p.m. Eastern Time. The stablecoin jumped back to the 0.99 USD range after US Feds revealed that they would bail out all the depositors of California’s SVB and New York Signature Bank. As soon as the US Feds made this announcement, the CEO of Circle, Jeremy Allaire, tweeted that their company would rely on BNY Mellon to settle the process of minting and redemption.
US government is looking to mitigate risks arising from the fractional banking system
At 6:41 p.m. Indian Standard Time on March 13, 2023, the stablecoin issued by Circle, USDC, is trading currently at 0.9959 USD per unit after crossing the 0.99 price mark yesterday. Three minutes after the stablecoin returned to the 0.99 USD region, Circle’s Chief Executive Officer, Mr Allaire, tweeted that USDC operations would start again from Monday.
The announcement also follows the US Fed’s disclosure that it has established a backstop entity called the BTFP, or Bank Term Funding Program, which will help banks to face liquidity challenges. The US central bank also stated that all the Silicon Valley Bank and Signature Bank depositors would get their money back.
This means Circle Financial, the issuer of UDSC, won’t lose their funds because the bailout will make depositors whole, but Circle does lose a banking partner with Signature being shut down by New York regulators.
Allaire, CEO of Circle, released a statement stating that they were heartened to see the US government and financial regulators take the necessary steps to lower the risk from the fractional banking system.
Circle is forced to rely on BNY Mellon for settling the USD minting and redemption
Recently, USDC has nearly regained parity with the US dollar after rising just above 0.99 USD on March 12, 2023, at 7:20 p.m. Eastern Time. Talking on this matter, the CEO of Circle, Allaire, revealed that all the deposits from the Silicon Valley Bank are totally secure and will be available at the banking open tomorrow.
He added that hundred per cent of the USDC reserves are also safe and secure. However, in a following tweet, he also mentioned that with the closure of the SVB announced recently, Circle has been forced to rely on BNY Mellon for USDC minting and redemption settlements, as they would not be able to do through Signet.
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