Circle, a prominent worldwide financial technology company specializing in developing solutions for payments and cryptocurrencies, has announced that its USDC operations would formally open for business on Monday. As part of this rollout, Circle will introduce automated settlement capabilities for USDC transactions in partnership with Cross River Bank.
Circle’s USDC operations will open for business on Monday morning, including with new automated settlement via our new partnership with Cross River Bank. https://t.co/ybkSEedzrC
— Jeremy Allaire (@jerallaire) March 13, 2023
USDC depegged from the US dollar amid SVB collapse
According to reports, this information became available after USDC, the second-largest stablecoin with a market worth of $42 billion, depegged from the United States dollar as the contagion from the collapse of Silicon Valley Bank spread.
To put this into perspective, Circle, the business that first created USDC pegged to the US dollar, said that $3.3 billion of the original $40 billion value of the stablecoin in reserves was still being stored at Silicon Valley Bank (SVB). Since early forecasts projected that the bank would have more than one billion dollars in reserves, the disclosure of this information was a surprise.
Nonetheless, in accordance with Jeremy Allaire, the Chief Executive Officer of Circle, one hundred percent of deposits made via SVB are safe and will be accessible at the banking locations.
Also, according to the Chief Executive Officer, typical liquidity operations for the stablecoin USDC will resume on Monday.
Minting will rely on BNY Mellon
Nevertheless, given that it was announced that Signature bank would be liquidating its assets, Circle would no longer be able to manage minting and redemption via the use of SigNet. Instead, Circle will rely on settlements made via BNY Mellon to complete their transactions.
In conclusion, Jeremy Allaire believes that the establishment of stablecoin funds using cash held at the Fed and short-term Treasury bills is necessary to ensure the integrity of the financial system. Allaire is of the opinion that this legislation is more important today than it has ever been before. The Payment Stablecoin Act, which is now being vigorously pursued by Congress, would provide a legal foundation for this regime.