Scrutiny Falls on $43B USDC Stablecoin’s Cash Reserves at Failed Silicon Valley Bank

Circle’s USDC, the second-largest stablecoin, with $43 billion market capitalization, held an undisclosed part of its $9.8 billion cash reserves at failed Silicon Valley Bank.

AccessTimeIconMar 10, 2023 at 7:35 p.m. UTC
Updated Mar 11, 2023 at 1:11 a.m. UTC

U.S.-based stablecoin issuer Circle held a part of its USDC stablecoin’s cash reserves at Silicon Valley Bank as of Jan. 17, according to the firm's latest attestation.

USDC is the second-largest stablecoin on the market, with a $43 billion circulating supply that is fully backed by government bonds and cash-like assets.

According to Circle’s January reserve report, the firm held some $9.88 billion of cash deposited at regulated banks to back USDC’s value. According to Circle's website on March 10, cash deposits in the reserves amounted to $11.1 billion.

USDC’s banking partners included Silicon Valley Bank (SVB), the California-based bank that was taken over by regulators and shut down on Friday.

The full list of banks that held cash for Circle’s USDC are Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank (a division of Flagstar Bank, N.A.), Signature Bank, Silicon Valley Bank and Silvergate Bank. Circle also keeps some part of USDC reserves in a dedicated BlackRock fund.

Circle said last week it had cut ties with Silvergate Bank, the crypto-friendly bank that halted operations and said it would “voluntarily liquidate” its assets earlier this week.

Signature Bank’s holding company’s (SI) shares have dropped 12% on the news about SVB’s shutdown. Signature said in December that it would reduce deposits tied to crypto firms by as much as $10 billion.

Circle spokesperson said late Friday that SBV was one of the six banks that the firm used "for managing the approximately 25% portion of USDC reserves held in cash."

"While we await clarity on how the FDIC receivership of Silicon Valley Bank will impact its depositors, Circle and USDC continue to operate normally," according to the statement.

Simon Dixon, CEO of online investment platform BnkToTheFuture, tweeted that Circle's chief executive Jeremy Allaire said the firm held "most of their cash is in BNY Melon," while sharing a screenshot from March 2. BnkToTheFuture is an investor and shareholder in Circle.

The recent failure of crypto- and tech-focused banks investors has rattled investors, causing crypto markets to crash. Bitcoin (BTC), the largest cryptocurrency by market capitalization, fell below the psychologically important $20,000 level, the lowest since January.

UPDATE (Mar. 10, 20:20 UTC): Adds comment from Simon Dixon, CEO of BnkToTheFuture, investor in Circle.

UPDATE (Mar. 11, 01:05 UTC): Adds comment from Circle spokesperson. Adds latest data about USDC reserves in cash.


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Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.