As the Fed bails out banks, cryptos rally and USDCs peg is restored

- A crisis with one of the largest players in the cryptocurrency ecosystem seems to have been averted as Circle, the company responsible for issuing USD Coin , the second-ranked stablecoin in the market, has announced that all their funds held at Silicon Valley Bank would be available beginning Monday morning.

On Friday, as regulators in the U.S. were announcing the seizure of SIVB, Circle revealed that it had a portion of its USDC cash reserves held at the bank. This led many USDC holders to dump the token out of fears that it could collapse the way TerraUSD did in May of last year, an event that sent a contagion shockwave across the crypto ecosystem.

Circle also provided additional details about the reserves backing USDC, indicating that 77% is currently collateralized with short-dated U.S. Treasury Bills, “the most liquid assets in the world and direct obligations of the U.S. government.” “Trust, safety and 1:1 redeemability of all USDC in circulation is of paramount importance to Circle, even in the face of bank contagion affecting crypto markets,” said Jeremy Allaire, Co-founder and CEO of Circle. “We are heartened to see the U.S. government and financial regulators take crucial steps to mitigate risks extending from the banking system.

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