Circle’s USDC regains $1 stick after tumultuous weekend

After breaking the tie over the weekend and trading as low as $0.87, Circle’s USDC stablecoin is now back at $1.

1 USDC for $0.87

All eyes are on the USDC as the banking crisis rages on.

Circle’s USDC regained its $1 peg earlier today after a turbulent weekend that saw the second-largest stablecoin by market cap fall to $0.87.

Stablecoins are cryptocurrencies designed to stay at par with a government-issued currency, such as the US dollar or the euro. In USDC’s case, parity is achieved and maintained by backing each token with 1:1 dollar reserves.

However, Circle revealed late Friday that of its $40 billion in reserves, $3.3 billion remained stuck in Silicon Valley Bank. Silicon Valley Bank experienced a bank run shortly thereafter announcement on Wednesday that it took extraordinary and immediate steps to shore up its finances — including selling $21 billion of its most liquid assets, borrowing $15 billion and raising cash by organizing an emergency stock sale. The FDIC forced the bank to close on Friday.

Circle’s disclosure – compounded by the firm’s inability to redeem USDC directly over the weekend due to banking system hours – sent USDC down as low as $0.87, per Coingecko data. However, Circle CEO Jeremy Allaire took to Twitter on Saturday to assure that the firm would indeed be redeeming USDC tokens on a 1:1 basis on Monday morning as normal. The statement helped the USDC back to $0.94.

The USDC fully regained its bond shortly after the US government announced it would take steps to ensure all Silicon Valley Bank depositors would be made whole. Allaire responded to the news by saying that Circle would move all of its remaining Silicon Valley Bank deposits to BNY Mellon — another of Circle’s banking partners.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH and several other crypto assets.