Scrutiny Surrounds Circle’s USDC Stablecoin Assets After Silicon Valley Bank’s Closure


As of Jan. 17, U.S. based stablecoin issuer Circle had a portion of its USDC stablecoin’s cash reserves at Silicon Valley Bank, according to the latest attestation. USDC is the second largest stablecoin by market cap and has a circulating supply of $43 billion, fully backed by government bonds and cash-like investments.

Circle’s January reserve report showed that the firm had $9.88 billion of cash deposited in regulated banks to back USDC’s value. The bank partners included Silicon Valley Bank (SVB), which was based in the United States, but was recently shut down by regulators. The other banks listed were Bank Of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank (A division of Flagstar Bank, N.A.), Signature Bank, and Silvergate Bank. Additionally, a portion of USDC reserves is held in a BlackRock fund.

Last week, Circle announced that it had severed all ties with Silvergate Bank, a crypto-friendly bank that announced plans to “voluntarily liquidate” its assets earlier in the week. The news of SVB’s closure has caused Signature Bank’s holding company’s (SI) shares to drop 12%. In December, Signature Bank had predicted that deposits from crypto-firms could be reduced by up to $10 billion.

When asked for comment on Circle’s exposure to SVB and Signature Bank, the firm did not respond. However, Simon Dixon, CEO of BnkToTheFuture, an online investment platform, tweeted that Circle’s Chief Executive Jeremy Allaire had previously said that “most of their cash is in BNY Mellon”. BnkToTheFuture is both an investor and shareholder in Circle.

The recent failures of investors in crypto- and tech-focused banking institutions has shaken the markets, leading to a crash in crypto prices. Bitcoin (BTC), the largest cryptocurrency, fell below the $20,000 psychological support level, hitting lows not seen since January 2009.

UPDATE (Mar. 10, 20:20 UTC): Includes comment from Simon Dixon, CEO of BnkToTheFuture, which is both an investor and shareholder in Circle.

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