Circle Partners with Cross River Bank, USDC Reserves are Safe
- Circle CEO Jeremy Allaire said that his company has partnered with Cross River Bank to establish a new automated settlement system due to Signature Bank’s collapse.
- The USDC reserves deposited in Silicon Valley Bank (SVB) are not at risk, are 100% safe, and will be available once SVB opens on Monday.
- All the cash deposited on SVB will be transferred to BNY Mellon, and Circle will be relying on the bank for settlements as well.
- Binance will convert the remaining 1 billion dollars of the Industry Recovery Initiative funds from BUSD to native crypto, including BTC, BNB, and ETH.
The panic prevalent in the crypto industry following the collapse of Silvergate Capital and Silicon Valley Bank (SVB) is far from settled. It is crucial to note that Circle, the company behind popular stablecoin USDC, had exposure to SVB, and as a result, the company’s stablecoin was sold at massive discounts and lost its peg to the US dollar. The company confirmed that all of its reserves are safe in a recent announcement.
According to a post from Circle on March 13, the company’s funds deposited in Silicon Valley Bank (SVB) are not at risk and 100% safe. Around 8% of the total cash reserves of USDC, i.e., $3.3 billion, were kept in SVB, and these funds will be available once the bank resumes operations on Monday under the FDIC.
“We were heartened to see the US government and financial regulators take crucial steps to mitigate risks extending from the fractional banking system. 100% of deposits from SVB are secure and will be available at banking open tomorrow,” said Jeremy Allaire, Co-founder and CEO of Circle.
On the other hand, Circle has also partnered with crypto-friendly Cross River Bank, an American financial services organization that provides technology infrastructure to fintech and technology companies, to establish a new automated settlement system. This was done because Signature Bank, another popular crypto-friendly bank, was closed by authorities. More importantly, the USDC issuer does not have any funds deposited at Signature Bank.
Once the bank opens, Circle will be able to take out its funds without any issue, confirmed Allaire in a Twitter post, while adding that “with the closure of Signature Bank announced tonight, we will not be able to process minting and redemption through SigNet, we will be relying on settlements through BNY Mellon.”
Interestingly, all the cash deposited on SVB will be transferred to BNY Mellon, one of the largest and most stable banking institutions in the world.
“Indeed, the Payment Stablecoin Act, which remains a very active pursuit for Congress, would enshrine in law a regime where stablecoin funds would be held with cash at the Fed and short-term T-Bills. We need this law now more than ever if we want a truly safe financial system,” noted the Circle executive.
As reported earlier by BitcoinWisdom, Circle confirmed that the USDC stablecoin will remain redeemable 1 for 1 USD irrespective of the circumstances. However, in case of a shortfall, the company will cover the difference via corporate resources or seek outside financing if needed.
The CEO of the world’s largest crypto exchange, Binance, Changpeng Zhao, also known as CZ in the crypto space, commented on the recent changes in stablecoins and their stability, adding that Binance will convert the remaining $1 billion of the Industry Recovery Initiative funds from BUSD to native crypto, including BTC, BNB and ETH. To show transparency, some of the transactions will occur on-chain.
The closure of SVB bank has affected the crypto industry as well as the global financial industry, with many calling it the worst collapse since the 2008 economic collapse. However, Elon Musk, the CEO of Tesla and SpaceX and the new owner of Twitter, showed interest in buying SVB and making the bank digital.