USD Coin (USDC) is struggling to maintain its peg to the US dollar after revelations that some of the cash backing the top stablecoin is stuck in Silicon Valley Bank.
The Boston-based firm says $3.3 billion of the $40 billion backing USDC is locked in the collapsed bank, which is now controlled by the FDIC.
The revelation triggered a mass sell-off of the crypto asset, sinking the coin’s market cap from $43.6 billion to $37.3 billion overnight – a $6.3 billion decrease – with the coin trading at $0.91 at time of publishing.
Circle is joining a long list of companies who are calling for the US government to step in, save the bank, and ensure customers regain complete access to all of their funds.
Silicon Valley Bank is home to more than 2,500 venture capital firms, and its collapse represents the second-largest US bank failure in American history.
“Like other customers and depositors who relied on SVB for banking services, Circle joins calls for continuity of this important bank in the U.S. economy and will follow guidance provided by state and Federal regulators.”
The bank was shuttered on Friday by the California Department of Financial Protection and Innovation after reporting a $1.8 billion loss from mainly selling US government bonds.
US bonds are thought to be a safe way for banks to diversify, but the Fed’s sharp interest rate hikes have sent their prices in a downward spiral.
USDC is the second-largest stablecoin on the market. According to Circle’s website, the stablecoins are fully backed by a reserve fund.
In addition to the cash assets, Circle has more than $30 billion in US treasuries in a fund managed by BlackRock.