Circle’s USDC Stablecoin’s Cash Reserves at Failed Silicon Valley Bank

Circle, a U.S.-based stablecoin issuer, has come under scrutiny after it was revealed that the company held a portion of its USDC stablecoin’s cash reserves at Silicon Valley Bank (SVB) as of January 17th. This comes after SVB was taken over by regulators and shut down last week.

USDC is currently the second-largest stablecoin on the market, with a circulating supply of $42.7 billion( at the time of writing) fully backed by government bonds and cash-like assets. According to Circle’s January reserve report, the company held around $9.88 billion of cash ( Updated number’s from Circle towards end of article) deposited at regulated banks to back USDC’s value. In addition to SVB, USDC’s banking partners included Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank (a division of Flagstar Bank, N.A.), Signature Bank, and Silvergate Bank.

Circle also keeps some part of USDC reserves in a dedicated BlackRock fund. However, the recent failure of crypto- and tech-focused banks has rattled investors, causing crypto markets to crash. Bitcoin (BTC), the largest cryptocurrency by market capitalization, fell below the psychologically important $20,000 level, the lowest since January.

Signature Bank’s holding company’s shares have dropped 12% on the news about SVB’s shutdown. The bank had said in December that it would reduce deposits tied to crypto firms by as much as $10 billion. Circle has not yet commented on the firm’s exposure to SVB and Signature Bank at this time.

According to Simon Dixon, CEO of online investment platform BnkToTheFuture, Circle’s CEO Jeremy Allaire said that the majority of the company’s cash is held in BNY Mellon, as shared in a screenshot from March 2nd. BnkToTheFuture is an investor and shareholder in Circle.

This latest news has raised concerns among investors and the crypto community about the safety and regulation of stablecoins and their cash reserves. As the crypto industry continues to evolve and grow, it is important for companies like Circle to ensure the safety and security of their customers’ assets.

UPDATE received just now : ( Mar 10th 11:58pm)

• Circle just confirmed they had $3.3Billion exposure instead of 9.88 mentioned above as per Deloitte’s audit. Below is the tweet from Circle confirming the same.

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1/ Following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the ~$40 billion of USDC reserves remain at SVB.

— Circle (@circle) March 11, 2023

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