Coinbase provides Circle with a $3 billion loan after the collapse of SVB
A Fortune source reported that the USDC issuer was planning to withdraw assets from the bank before it went bankrupt
21.03.2023 - 09:00
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What’s new? Crypto exchange Coinbase provided Circle (the issuer of the USDC stablecoin) with a nearly $3 billion line of credit following the collapse of Silicon Valley Bank (SVB), Fortune reports. According to the publication’s source, Circle sent a request to withdraw $3,3 billion from SVB back on March 10, but the bank collapsed before the transaction could be completed. Even though the stuck deposit represented only 8% of the issuer’s reserves, investors began selling off USDC, resulting in a temporary loss of the asset’s parity with the dollar.
What else is known about the situation? The line of credit guaranteed the full liquidity of USDC reserves and ensured that stablecoins could be converted into dollars after the SVB collapse. According to a Fortune source, Coinbase and Circle were planning to announce details of the deal but did not do so because of bank regulators’ actions to address the crisis. Circle declined to comment on these events, while not denying them.
US authorities announce the rescue of the bankrupt bank SVB deposits
The regulators said in a statement that the plans do not involve a bailout of the institution itself and would not require taxpayer spending
On March 13, Circle CEO Jeremy Allaire said that reserves from SVB would be transferred to BNY Mellon Bank, assuring users that the funds were safe. On the same day, the company was able to resume access to its funds at SVB. At the time, Allaire said that USDC was “the safest digital dollar on the internet.”
He later said that the risks to the US banking system remain, and Circle will protect itself by cutting deposits at banking institutions.
Circle and Coinbase accuse US banks of destabilizing the crypto market
The companies’ representatives stressed that it was TradFi that infected the crypto industry, not the other way around
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