Circle, a leading issuer of the stablecoin USDC, has reportedly moved to restore investor confidence after an operational failure at Signature Bank caused some investors to lose access to their funds.
Signature Bank’s Operational Failure Causes USDC Disruptions
Signature Bank suffered an operational failure that resulted in many of its customers losing access to their funds, including those using USDC. This event prompted concerns over USDC’s ability to maintain its $1 peg to the U.S. dollar.
CEO of Circle Jeremy Allaire did annouce on twitter “With the closure of Signature bank announced tonight, we will not be able to process minting and redemption through SigNet, we will be relying on settlements through BNY Mellon.”
He further tweeted that “Additionally, we will be bringing on a new transaction banking partner with automated minting and redemption potentially as soon as tomorrow. We are committed to building robust and automated USDC settlement and reserve operations with the highest quality and transparency.“
Over the week exposure to SVC did shake USDC. Details can be read in the links below :
- Coinbase pauses USDC to USD for the weekend – Puts investors in worry
- Circle’s USDC Stablecoin’s Cash Reserves at Failed Silicon Valley Bank
- USDC Depeg’s, currently at .92cents, Circle Confirms $3.3B Stuck with Silicon Valley Bank
- Binance has temporarily suspended auto-conversion of USDC to BUSD – Potentially due to Circle-Silicon Valley Bank exposure
Circle Moves to Restore Investor Confidence
Circle has since taken steps to reassure USDC investors that their funds are secure and that the company will take measures to prevent future disruptions. These measures include:
- Daily Audits: Circle will conduct daily audits of USDC holdings to ensure that the funds are fully backed by U.S. dollars.
- Independent Verification: Circle will also engage an independent accounting firm to conduct regular audits of its financial statements.
- Transparency: Circle will provide regular updates on its financials and USDC holdings to the public.
- Additional Safeguards: Circle will implement additional safeguards to prevent future disruptions, including enhancing its security measures and developing contingency plans.
Circle Emphasizes USDC’s Stability and Liquidity
Circle emphasized that USDC remains stable and liquid despite the recent disruption. The company reiterated that the stablecoin is fully backed by U.S. dollars and that it has a robust network of liquidity providers. Since SVC, this has been a challenge and after FEd’s words USDC at .99 at the time of writing.
Despite the recent disruption caused by Signature Bank’s operational failure, Circle remains confident in USDC’s stability and liquidity. The company has taken proactive steps to restore investor confidence and prevent future disruptions, including daily audits, independent verification, transparency, and additional safeguards.
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