USDC Returns To $1 Peg After Fed Announcement

(CTN News) – Jeremy Allaire, Circle’s CEO, confirmed to the Financial Times that the stablecoin USD Coin USDC $0.99 is climbing back up to its $1 peg after he confirmed that the firm’s reserves were safe and it has new banking partners lined up for banking open tomorrow morning.

At the time of writing, CoinGecko data shows that USDC has increased 3.3% in the past 24 hours to sit at $0.99 at the time of writing.

After the California Department of Financial Protection and Innovation shut down Silicon Valley Bank on March 10 as a result of concerns about the $3.3 billion worth of USDC reserves that were held there, the USDC price fell to $0.87 over the weekend.

A significant amount of Circle’s reserves are also locked inside the recently bankrupted Silvergate, where an undisclosed amount has been left.

According to a tweet Allaire posted on March 12 in which he praised both the U.S. government and the Federal Reserve for the $25 billion funding program they have put into place to help banks in liquidity trouble like SVB :

Due to the implosion of crypto-friendly Signature Bank on March 12, Circle is no longer able to process USDC redemptions and mintings through its SigNet platform and will therefore need to “rely on settlements through BNY Mellon for the time being.” Allaire added.

There is however no doubt that Circle will move quickly in this regard, as the CEO revealed that the company will be bringing on a new transaction banking partner with automated minting and redemption as early as tomorrow.

As a result of the statement from Allaire and the announcement from the Federal Reserve, asset prices have seen a significant boost and are now above $1 trillion, following the sharp drop from $961 billion that the crypto market saw on March 11 to now be over $1 trillion.

In the last 24 hours alone, assets such as Bitcoin BTC $22,041, Ether ETH $1,578, Cardano ADA $0.330, Polygon MATIC $1.1020, and Solana SOL $19 have surged a massive 10.6%, 11.4%, 12.3%, 11.7% and 15.1% respectively.

The fact that this has happened despite Signature Bank collapsing is noteworthy.

There was a perception that Signature was the last crypto-friendly bank in the United States following the closure of Silvergate and SVB, and it is now unclear what the major banking entry points into crypto will be in the future.

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