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US$3 Billion Pulled From Stablecoin USDC Following Circle-SVB Link

Circle's $3.3 billion exposure to SVB has led to investors cashing in their USDC in their masses.

Photo by Bernard Hermant / Unsplash

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US$3 billion has been pulled from USDC over the last three days as investors look to restore their cash after the collapse of Silicon Valley Bank (SVB).

Last weekend, Circle's USDC went through a panic, falling to as low as $0.88, when it was revealed that $3.3 billion of their reserves were sitting inside SVB when the bank failed.

Circle then announced USDC redemptions would be automated through its new partnership with Cross River Bank.

Read more: Delving Deeper Into the Circle Debacle

From Monday to Wednesday, $3.8 billion of USDC redemptions were processed by Circle, which also minted $800 million more of the token, netting to an exit of S$3 billion.

"As of close of U.S. banking operations Wednesday, March 15, we have cleared substantially all of the backlog of minting and redemption requests for USDC," Circle stated in a blog post.

"We will continue efforts to add additional transaction banking partners."

Stablecoin market

Following the collapse of the crypto banks Silvergate, SVB and Signature Bank, investors are flocking to dollar-equivalent tokens as a kind of alternative currency. This is happening even though the crypto market as a whole is in a slump.

More so after the US Securities and Exchange Commission (SEC) was unsuccessful in its fight against Binance and is now under attack for its investigation into stablecoins.

Read more: Stablecoin Demand Grows After Silvergate Exodus

The Commodity Futures Trading Commission (CFTC) has decided that stablecoins are commodities and not securities, ending a heated debate on the subject.

Most recently it was revealed that Circle and KuCoin have backed Chinese yuan-backed stablecoin CNHC in a US$10 million funding round.

Over 99% of existing stablecoins are backed by USD. CNHC is backed and pegged 1:1 to the Chinese offshore yuan CNH. The currency is traded in markets outside of China's mainland. Other non-USD backed stable coins include StraitsX's XSGD, which is backed by the Singapore dollar.

Read more: KuCoin, Circle Back Yuan-Pegged Stablecoin

As well as eliminating exchange risks for Chinese exporters, CNHC offers a way for investors who value the strength of CNH to hedge against currency risk.

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