USDC Minting And Redemption Backlog Almost Cleared By Circle

USDC stablecoin investors panicked when Circle announced its exposure to the shuttered banks, and Circle’s latest report on USDC Reserves and attestation from Deloitte, the global audit company, confirms the connection. 

However, in a new development, Circle reports almost clearing all minting and redemption requests for USDC. The current situation shows the issuer has cleared all the backlog in transacting with the stablecoin. 

Exposure Of Circle To Silicon Valley Bank

Before its closure, SVB stated its plan to boost its balance sheet by raising about $2.25 billion. This was after its loss of $1.8 billion through asset sales. The bank opted for asset sales when its efforts to raise capital failed. But the entire situation became complicated as the sales resulted in a massive outflow of deposits. 

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Subsequently, the California state financial regulators shut down the bank on March 10, seizing its deposits. The closure of SVB is associated with a bank run leading to a capital crisis that marked the second-largest implosion of a financial firm in the US.

The revelation of Circle’s exposure to the tune of over $3 billion to Silicon Valley Bank pushed USDC off its peg to the US dollar. Subsequently, the stablecoin de-pegged from its dollar value and even hit a record low on Saturday.

In its statement, Circle revealed it held 8% of USDC reserves of $40 billion at Silicon Valley Bank. This means that about $3.3 billion of the stablecoin reserves were trapped in the defunct bank.

After the announcement, USDC lost its $1 peg value by dropping to $0.87. The announcement from Circle created a frenzy for USDC, as even crypto whales suffered huge losses while trying to withdraw their funds. 

Circle’s Moves In Clearing USDC Minting And Redemption Requests

Circle posted a blog on its official website, updating its USDC operations after the initial announcement. It revealed that it had completed almost all the requests regarding the redemption and minting of USDC stablecoin.

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In the update, the issuer firm confirmed it received massive customer requests between March 13 and 15. It minted almost $800 million USDC and redeemed $3.8 billion. It noted that the activities in the past week had affected the liquidity operations for USDC. Also, it acknowledged the support and patience of its customers during the tiring period.

In its quest to circumvent the situation, Circle deepened its partnership with the Bank of New York Mellon (BNY Mellon). USDC issuer also revealed its collaboration with a new banking partner, Cross River Bank. The partner assisted the USDC issuer in making US transfers on March 14. Also, the partner undertook other international transfers for Circle to and from other countries.

As of Thursday, March 16, USDC is still trading at a 1:1 parity to the US dollar. It remains the fifth-largest cryptocurrency in the world with a market cap of $39.5 billion.

Featured image from Pixabay and chart from Tradingview.com