USDC Drops to $0.93 as Circle Reveals $3.3 Billion Held in Unexposed SVB, Tether and Binance

Following the second largest banking collapse in US history on Friday, market participants are concerned about which companies could be caught up in the contagion surrounding Silicon Valley Bank (SVB).

Here’s what VCs and top crypto executives had to say about the flop, and why the crypto community is keeping an eye on Circle afterwards.

USDC, the second largest stablecoin and the one issued by Circle, has lost its peg on numerous exchanges. At the time of writing, it is trading at around $0.94, according to data from CoinGeko.

However, it is important to note that Circle stated that the company continues to operate as normal, even though 25% of its cash reserves are in SVB, around $3.3 billion.

Is the circle in trouble?

One report indicated that, as of the end of January, Circle’s cash reserves were held at financial institutions regulated by the US, Silicon Valley Bank and Silvergate Bank.

The report claimed that about $9.88 billion is held in all of those institutions, though an updated figure in Circle’s transparency page he claimed that number has risen to $11.4 billion. That’s about 26.3% of Circle’s reserves, the rest of which were held in US Treasuries.

Circle’s $42.3 billion in total reserves was just 0.1% higher than its outstanding token debt of $42.2 billion. As of March 10 22:00 UST, USDC’s market capitalization is $42.8 billion, a decrease of $900 million from just four hours earlier, according to CoinGecko.

Fun fact guys!#Circle it had part of its stablecoin reserves at Signature Bank, Silicon Valley Bank, and Silvergate Bank as of this January.

The firm is down 46% in the month, and SVB/SI have already failed🙃

The company’s reserves are only 0.1% above the tokens in circulation… pic.twitter.com/BZHsyOFV9c

—Andrew Throuvalas (@AThrouvalas) March 10, 2023

At the time of writing, Circle has yet to release a statement specifying exactly how much of its reserves are held with each specific banking partner. However, Circle announced that BNY Melon was a “primary custodian” of USDC reserves 12 months ago. He also clarified that the small portion of his reserves were in Silvergate, a crypto bank that entered voluntary liquidation this week, they have already been moved to other banking partners.

Another of Circle’s partners, Signature Bank, appears to have been a first choice. alternative for crypto companies distancing themselves from Silvergate. However, even that company fell 22% on Friday amid widespread banking concerns surrounding SVB.

Tether and Binance

Tether, the world’s largest stablecoin issuer, does not appear to be under the same stress. When asked via Twitter, Tether CTO Paolo Ardoino said that the company had no exposure to SVB.

#Tie it has no exposure to Silicon Valley Bank, unlike Circle. https://t.co/wvwpM8K6bi

—Andrew Throuvalas (@AThrouvalas) March 10, 2023

Following the collapse of SVB, market participants appear to be dumping USDC and DAI (a crypto-backed stablecoin made up largely of USDC reserves) for Tether’s USDT on DeFi protocol Curve’s 3pool.

Ardoinio called the activity inside the pool a “flight to safety” over Twitter. Tether stablecoin dominance remains high at 53.3%, according to DeFi Flame.

Binance CEO Changpeng Zhao also confirmed that his company, the world’s largest cryptocurrency exchange, has no exposure to Silicon Valley Bank.

#Binance has no exposure to SVB. The funds are #ROW.

— CZ 🔶 Binance (@cz_binance) March 10, 2023