USDC Stablecoin Depegs From $1; Circle Says Operations Are Normal

Circle Internet Financial’s USDC stablecoin, which is the second-largest stablecoin at $42 billion of market cap, depegged from the U.S. dollar as contagion from the collapse of Silicon Valley Bank spread.

The USDC/USDT trading pair dropped as low as $0.973 on Kraken, the lowest price since Nov. 9, when FTX was collapsing. It recovered to $0.9949 as of press time.

USDC is meant to maintain a 1-to-1 peg with the U.S. dollar, but worries about the impact of Silicon Valley Bank’s failure drove it down from $1 on Friday.

An undisclosed portion of USDC’s cash reserves are parked at the now-failed bank, leading to concern that money backing the stablecoin is now stuck. Stablecoins like USDC are a key part of the crypto industry’s foundation, and when they stray far from $1 (or whatever fiat asset they’re pegged to) that suggests concern about their financial footing.

Circle did not respond to multiple requests for comment, but the payment services company tweeted late Friday: “Circle and USDC continue to operate normally.”

Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25% portion of USDC reserves held in cash. While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally.https://t.co/NU82jnajjY

— Circle (@circle) March 10, 2023