The Circle issuer released information about holding $3.3 billion in reserves at Silicon Valley Bank (SVB), which was closed by the government, after which the USD Coin Stablecoin (USDC) is no longer linked to the US dollar and currently trades at $0.92. In just one day, the market capitalisation of the USDC fell by 13%, with the value of the stablecoin falling to $38.1 billion.
The California Department of Financial Protection and Innovation closed Silicon Valley Bank on March 10. Lack of funds and bankruptcy led to this situation. As a result, the US FDIC (the Office of the Federal Deposit Insurance Corporation) took over the management of its activities.
Coinbase has suspended USDC to BUSD conversion due to bank closures over the weekend, but plans to resume operations on Monday ( March 13).
Binance suspended direct USDC to BUSD exchanges in light of the current market situation. Issuer Circle filed a complaint with NYDFS back in February about the way Binance USD (BUSD) stablecoin reserves are managed. Binance CEO Changpeng Zhao said he was not convinced by the information and wrote:
"I still believe they have done nothing to harm BUSD. Whoever hurts another person ends up hurting themselves."
Kraken cryptocurrency exchange CEO Jesse Powell said the collapse of Silicon Valley Bank had no impact on the cryptocurrency exchange.