Circle Internet Financial’s USDC stablecoin, which is the second-largest stablecoin at $42 billion of market cap, depegged from the U.S. dollar as contagion from the collapse of Silicon Valley Bank spreads.
The USDC/USDT trading pair dropped as low as 94 cents on Kraken, the lowest price since April 2021. It recovered to about 98 cents as of 02:54 UTC on Saturday.
USDC is meant to maintain a 1-to-1 peg with the U.S. dollar, but worries about the impact of Silicon Valley Bank’s failure drove it down from $1 on Friday.
An undisclosed portion of USDC’s cash reserves are parked at the now-failed bank, leading to concern that money backing the stablecoin is now stuck. Stablecoins such as USDC are a key part of the crypto industry’s foundation, and when they stray far from $1 (or whatever fiat asset they’re pegged to) that suggests concern about their financial footing.
Circle did not respond to multiple requests for comment, but the payment services company tweeted late Friday: “Circle and USDC continue to operate normally.”
UPDATE (March 11, 2023, 02:54 UTC): Updates to reflect new low price.
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