Circle’s USDC Endured $1B of Net Redemptions Since Silicon Valley Bank's Shutdown

Stablecoin issuer Circle held an undisclosed amount of USDC’s cash reserves at now-failed Silicon Valley Bank.

AccessTimeIconMar 11, 2023 at 1:01 a.m. UTC
Updated Mar 13, 2023 at 3:17 p.m. UTC

Circle Internet Financial’s USDC stablecoin had some $1 billion in net redemptions since Friday morning when Silicon Valley Bank (SVB), one of Circle’s banking partners, was shut down by regulators, blockchain transactions from crypto intelligence platform Nansen show.

According to Nansen, Circle burned some $1.6 billion of USDC on Friday, taking out the tokens from circulation as investors redeemed dollars. Circle also minted new coins, adding to the circulation, but much less than it destroyed.

Subsequently, USDC’s market capitalization fell to $42.4 billion from $43.5 billion on Friday, according to data from CoinMarketCap. USDC also depegged from $1, a sign of worry about the state of its reserves.

Investors rushed to redeem USDC tokens for dollars, blockchain data shows. (Nansen)
Investors rushed to redeem USDC tokens for dollars, blockchain data shows. (Nansen)

USDC is the second-largest stablecoin, trailing only Tether’s USDT, and a backbone of the crypto ecosystem. The token’s value is backed by U.S. government bonds and cash-like assets, including a total $11.1 billion of cash deposits at various regulated banks, according to Circle’s website.

Investors grew concerned with the stablecoin’s stability after SVB, one of the banks where Circle held a part of USDC’s backing assets, suffered a bank run. Regulators shut down the bank’s operations on Friday morning.

A Circle spokesperson told CoinDesk Friday afternoon that SVB was one of six banks that managed “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," the spokesperson added.

Sage D. Young contributed reporting.


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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.

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