Circle Issues Update on Stablecoin Volatility; The company is ready to “stand behind USDC and cover any deficits” –
On Saturday, March 11, 2023, Circle Financial informed the public of its stablecoin USDC, noting that the stablecoin’s liquidity operations resume as normal Monday morning in the United States. Circle said the company’s teams would be ready Monday to “handle significant volume” and that the company would “stand behind USDC and cover any shortfalls with corporate resources and bring in outside capital as necessary.”
Circle Financial confident in USDC stability despite SVB default
Kreis, the issuer of the second largest stablecoin market capitalization, usd coin (USDC), addressed the public on Saturday, noting that the firm will be ready to “handle significant volume” on Monday. Discussing the collapse of Silicon Valley Bank (SVB), the company also highlighted the USDC’s “strong liquidity and reserve assets.” On Monday, the stablecoin issuer noted, “USDC will remain redeemable 1:1 with the US Dollar.”
While usd coin (USDC) is a crypto asset that operates 24/7 on various blockchains, Circle emphasized that “issuance and redemption are constrained by the working hours of the US banking system.” Circle’s stablecoin USDC fell to a low of $0.877 per unit at 3:02 am ET on Saturday, March 11, 2023. Following Circle’s announcement, USDC managed to surge 10% higher, and at 4:15 p.m., the stablecoin was trading at $0.971 apiece. In addition to USDC, five other stablecoin assets deviated from their $1 parity on Saturday.
Circle said that while USDC cash reserves of $3.3 billion are held with SVB, the company has initiated wire transfers of the funds to other banks and remains “confident in the FDIC’s management of the SVB situation and is willing to receive these funds”. The stablecoin issuer further noted that it “has reason to believe that under applicable FDIC guidelines, remittances initiated prior to a bank’s entry into receivership would otherwise have processed normally.” circle further:
In other words, the FDIC should allow transactions to settle in the normal course until the end of a bank’s standard daily processing cycle, until the FDIC assumes control of the failed institution.
However, Circle addresses a negative scenario where SVB may not become complete and the company may take some time to return. Circle emphasized that in this case, it would still stand behind the issued stablecoin. “In such event, Circle will stand back as required by law under the Transfers of Money with Stored Value Regulations [USDC] and to cover any shortfalls with company resources, involving borrowed capital where appropriate,” the company’s update concludes.
What are your thoughts on Saturday’s stablecoin volatility and Circle’s recent update? Share your thoughts in the comment section below.
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Source: Crypto News Deutsch
