Circle (USDC) will cover funds shortfall caused by Silicon Valley Bank collapse
stated that there was a possibility of the firm not gaining back 100% of the funds. Moreover, it could take time for the company to get them back. And, this is because the “FDIC issues IOUs and advanced dividends to deposit holders.”
Nonetheless, Circle has assured that it will cover the fund’s shortfall caused by SVB’s collapse. The stablecoin issuer would pool in its corporate resources and even bring in external capital to address any deficiency in reserves.In its previous statement, Circle revealed the true extent of its exposure to the now-collapsed. The firm revealed that the failed bank has $3.3 billion of USDC’s cash reserves.
Notably, in its recent statement, the company expressed confidence in the approval of the transfers. This is because transfers made before the bank entered receivership would be processed normally as per the FDIC policy, Circle said. The statement further read, “We understand that the FDIC is currently determining the status of transactions initiated prior to the applicable receivership cutoff times, and it is possible that the transfers initiated on Thursday will be processed on Monday.”held in cash.” A majority of the funds are held in US Treasury Bills, which is 77% or $32.4 billion of USDC reserves. These Treasury Bills are currently in the custody of BNY Mellon. The rest $9.8 billion was in banks, which included SVB.
“Last week, we took action to reduce bank risk and deposited $5.4bn with BNY Mellon, one of the largest and most stable financial institutions in the world, known for the strength of their balance sheet and as a custodian.Subscribe to get it daily in your inbox.
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