• On March 9, Circle initiated a wire transfer to withdraw $3.3 billion of its $40 billion reserves from Silicon Valley Bank (SVB).
• However, two days later, on March 11, Circle confirmed that the wire transfers were not wholly processed and USDC prices fell immediately after the revelation.
• As a result of this news, USDC had lost over 10% of its value as it traded at $0.8774 and Dante Disparte warned that SVB’s failure will have broader implications for business, banking and entrepreneurs without a Federal rescue plan.
Circle Initiates Wire Transfer
Almost immediately after USD Coin (USDC) issuer Circle revealed it could not withdraw $3.3 billion of its $40 billion reserves from Silicon Valley Bank (SVB), the resultant sell-off caused the price of the stablecoin to fall below its $1 peg. On March 9, Circle initiated a wire transfer to remove its funds from SVB as the Federal Deposit Insurance Corporation-insured bank was about to shut operations.
Wire Transfers Not Wholly Processed
Two days later, on March 11, Circle confirmed that the wire transfers were not wholly processed with $3.3 billion of USDC reserves still with SVB. The company also joined calls for continuity of this important bank in the U.S economy and will follow guidance provided by state and Federal regulators.
USDC Price Falls Below Peg
Data from Cointelegraph Markets Pro and TradingView show that USDC prices fell immediately after the revelation with USDC depegging from the U.S Dollar at the time of writing with over 10% loss in value as it traded at $0.8774.
Implications For Businesses Without Federal Rescue Plan
Dante Disparte commented on this situation warning that there would be wider implications on businesses, banking and entrepreneurs without a federal rescue plan should SVB fail to continue operations: “Like other customers and depositors who relied on SVB for banking services, Circle joins calls for continuity of this important bank in the U.S economy and will follow guidance provided by state and Federal regulators.”
Conclusion
The news of Circle being unable to withdraw their funds from SVB has led to an immediate sell-off resulting in USDC losing more than 10% off its original value pegged at $1 USD per coin currently trading at around 087$. This has raised concerns regarding businesses banking services without a federal rescue plan if SVB fails to continue operating effectively in future scenarios