USD Coin (USDC) is struggling to maintain its peg to the US dollar after revelations that some of the cash backing the major stablecoin is stuck in Silicon Valley Bank.
The Boston-based firm says $3.3 billion of the $40 billion backing USDC is locked up at the collapsed bank, which is now controlled by the FDIC.
The revelation triggered a sell-off of the crypto asset, plunging the coin’s market capitalization from $43.6 billion to $37.3 billion overnight, a decline of $6.3 billion, with the coin trading at $0.91 at press time.
Circle joins a long list of companies calling on the US government to step in and save the bank, which is home to more than 2,500 venture capital firms.
“Like other customers and depositors who have relied on SVB for banking services, Circle joins calls for the continuity of this major bank in the US economy and will follow guidance provided by state and federal regulators. “.
The Silicon Valley Bank collapse represents the second largest US bank failure in US history.
The bank was shut down Friday by the California Department of Financial Protection and Innovation after reporting a $1.8 billion loss primarily from the sale of US government bonds.
US bonds are believed to be a safe way for banks to diversify, but sharp rate hikes by the Fed have sent their prices spiraling.
USDC is the second largest stablecoin on the market. According to the Circle website, stablecoins are fully backed by a reserve fund.
In addition to cash assets, Circle holds more than $30 billion in US Treasuries in a fund managed by BlackRock.
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