Cryptocurrency exchange Coinbase has reportedly offered a $3 billion credit facility to Circle, the cryptocurrency firm that issues the USD Coin (USDC) stablecoin, in an effort to bring the stablecoin back to its USD peg. 1.
The latest development comes after the USDC lost its peg to the US dollar due to Circle’s $3.3bn exposure to Silicon Valley Bank, which was taken over by the FDIC.
Coinbase Reportedly Offered a $3 Billion Safety Net
According reportsCircle requested an emergency credit line to guarantee the stability of USDC, and Coinbase provided the credit line that would have covered all liquidity in USDC reserves and allowed the stablecoin to be converted to US dollars after Silicon went bankrupt. Valley Bank.
The divestment event occurred after Circle planned to pull its deposits out of Silicon Valley Bank just days before the bank was ordered by regulators to close its doors.
It caused a lot of Fear, Uncertainty, and Doubt (FUD) among investors, who rushed to withdraw their funds from the stablecoin, causing it to de-peg from the US dollar and trade below $0.90.
As of now, the USDC price is back at its $1 peg with a market capitalization of $35 billion.
Coinbase Plans Offshore Unit Amid US Regulatory Scrutiny
On March 17, crypto.news reported that Coinbase may establish an offshore unit due to increased industry regulatory scrutiny in the US. The report suggests that global transactions would be routed through the new facility, and Coinbase has yet to confirm the report. .
While Coinbase has yet to confirm the report, the company’s COO Emilie Choi mentioned during a earnings call that “international expansion will continue to be a fundamental part of our way of operating”.
Choi expressed approval of recent regulatory developments in Europe and the UK, revealing that Coinbase plans to continue investing in those jurisdictions.
The exchange recently praised the UK for launching consultations on a future new financial services regulatory regime for crypto assets, signaling its continued investment in caring nations.
