%USDCoin ($USDC) is struggling to regain its peg to the U.S. dollar after Circle, which issues the popular %Stablecoin, said that it has $3.3 billion U.S. tied up in now defunct %SiliconValleyBank ($SIVB).
A stablecoin such as USDC is a cryptocurrency whose value is pegged one-to-one with the U.S. dollar. It is supported by tangible assets such as U.S. Treasuries and cash and is the second biggest stablecoin after %Tether ($USDT).
Last week, Circle said that $3.3 billion U.S. of its cash reserves are in Silicon Valley Bank, which was shutdown by U.S. regulators on March 10 following a bank run that saw $40 billion U.S. of deposits withdrawn in a little more than 24 hours.
After Silicon Valley Bank’s failure, USDC lost its peg to the U.S. dollar, falling as low as $0.86 U.S., according to data from CoinDesk.
Circle said it holds a total of $9.7 billion U.S. in cash reserves, of which $5.4 billion U.S. is with Bank of New York Mellon (BK).
In recent days, Circle has sought to reassure investors that the $3.3 billion U.S. in reserve deposits it has at Silicon Valley Bank will be fully available to it as early as today (Mach 13).
USDC was close to regaining its U.S. dollar peg after Circle’s reassurance and was hovering just under the $1 U.S. mark in pre-market trading.
In a written statement, Circle said that USDC remains redeemable one-to-one with the U.S. currency.
Silicon Valley Bank is the latest in a series of technology and cryptocurrency lenders to fail over the past week.
Silvergate Capital (SI), a major lender to the cryptocurrency sector, announced last week that is ceasing operations and liquidating its assets.
On March 12, U.S. regulators announced that they are shutting down another cryptocurrency lender, %SignatureBank ($SBNY), to prevent further contagion in the American financial industry.
Despite the turmoil, the cryptocurrency market is rallying as regulators step in, with the price of Bitcoin up 10% and trading back above $22,000 U.S.
Last week, the price of Bitcoin fell below $20,000 U.S., hitting its lowest level in more than two months, following the announcement that Silvergate Capital was shutting down.