Following its exposure to the Silicon Valley Bank closure, the Circle USDC stablecoin has repegged and is trading at $1. Moreover, Coindesk initially reported the stablecoin’s regain of the dollar peg, following its connection with the bank failure last week.
Conversely, the Federal Reserve stated last night that all depositors affected by the SVB closure would be made whole. Additionally, with those depositors having access to funds today, Circle has regained its peg, with it now trading at $1.
Circle Regains Dollar Peg
The closure of Silicon Valley Bank is easily among the most concerning developments in the financial sector in recent years. Conversely, as the industry grapples with the potential fallout of the most significant banking failure since 2008, the US government is attempting to protect depositors through intervention.
Now, the Circle USDC stablecoin has repegged and is currently trading at $1. Moreover, Coindesk initially reported the regain of the dollar peg and noted the part that the Federal Reserve aid played in the development.
The Circle-issued stablecoin plummeted in value on Friday, as users learned of the company’s exposure to SVB Financial. Subsequently, they acknowledged that they maintained around $3.3 billion over funds backing USDC in the now-closed bank. A total that represents approximately 8% of the overall funds.
Ultimately, Coindesk notes that the FDIC sale of SVB’s assets will present uninsured depositors with a dividend. Thus, this should be a positive for depositors at the bank, as 90% of funds held in Silicon Valley Bank were uninsured.