Today, a popular blockchain payment firm and issuer of USD coin, Circle admitted that not less than $3.3 billion cash backing its coin is tied with Silicon Valley Bank (SVB). In its Saturday Twitter post, the company confirmed that it initiated wires to remove the funds from the bank yesterday. But, SVB, according to the announcement, failed to process the initiated wires.
Worthy of note that the $3.3 billion represents the remaining balance of Circle’s $40 billion USDC reserves tied with Silicon Valley Bank (SVB). Recall that Circle had earlier described SVB as one of its six banking partners. According to findings, the bank managed at least 25% of the total reserves of USDC.
However, following the crash of Silvergate, another banking partner to Circle, the banking sector has continued to be in a state of disarray. On Thursday, Silvergate announced that it is closing down its operations. Recall that since its exposure to FTX, the banking giant has been struggling to sustain its business. Now, its decision to leave the market did not only impact crypto prices, but other firms in the banking sector, including SVB.
Shortly after, reports confirmed the closedown of SVB by the California’s regulator. As of press time, the regulator is yet to explain the reason behind its decision to closedown the financial firm. But, it has appointed the Federal Deposit Insurance Corporation (FDIC) to protect insured deposits on SVB.
Circle advocates the continuity of SVB
Following this development, Circle made an attempt to withdraw its $3.3 billion balance from SVB. But, after the bank failed to process the wires, the USD coin issuer chose to reveal its situation to the public. In its post, Circle hinted that the drive to promote transparency on the issue prompted its resolution to hint the public about the development.
Circle, however, joined other customers and depositors to insist on the continuity of SVB. The blockchain payment firm claimed the sustainability of the bank is important for the U.S economy. More so, Circle plans to adhere to the guidance availed by the state and federal regulators to unravel the mystery.
A few hours ago, the chief strategy officer of Circle, identified as Dante Disparte gave further insights on the development. According to Dante, Circle wants to protect USDC from a black swan failure in the U.S banking sector. The exec called on the FDIC to initiate a rescue plan for SVB. He explained that the failure of FDIC to come up with a rescue plan will broadly affect other businesses.