Silicon Valley Bank’s precipitous collapse has affected the value of the world’s fifth-largest cryptocurrency, raising fears of a possible ripple effect among Web3 companies. On Saturday morning, USD Coin fell to a record low of $0.87 after Circle, the company that manages the stablecoin, said $3.3 billion of the approximately $10 billion in cash reserves backing USDC was held by SVB.
As , the decline is unprecedented. As a stablecoin, the value of USDC is supposed to remain stable thanks to its peg to the US dollar. According to , USDC’s previous all-time low was around $0.97 in 2018. Recently, the currency dropped to $0.99 after . As of the writing of this article, USDC is valued at approximately $0.95 cents.
previously people argued that the USDC had only lost its peg on the less deep exchanges (kraken, gemini)
down almost everywhere now. It’s going to be a tough weekend, I think. pic.twitter.com/4BCW6Lael9
— Molly White @ SXSW (@molly0xFFF) 11 March 2023
creator Molly White suggests that the effect of a sustained USDC decline would be A handful of other stablecoins, including FRAX and DAI, use USDC as collateral. On Friday, Circle it would “continue to operate normally” while it waits for more information about what will happen to SVB’s customers. “As of Thursday, we had begun transfers of these funds to other bank partners. Although these transfers had not yet been settled by the close of business on Friday, we remain confident in the FDIC’s management of the SVB situation and are ready to receive these funds,” Circle said on Saturday and added that $5.4 billion of its cash assets are held by BNY Mellon, “one of the largest and most stable financial institutions in the world.”