Circle has partnered with Cross River as regulators shut down Silicon Valley Bank and Signature. The partnership ensures that USDC maintains its 1:1 peg to the US dollar.
Circle, one of the largest stablecoin issuers in the crypto ecosphere, announced plans to expand its banking partnerships following the collapse of Silicon Valley and Signature banks.
The news aligns with a tweet posted by a Chinese reporter, Colin Wu, who reported that the farm would be fishing for other crypto-friendly banks to work with. Cross River is known for working with Coinbase.
According to the company’s press release statement, Circle was exposed to Silicon Valley before its collapse. The firm had $3.3 billion (equivalent to 8% of the total USDC reserves) locked up in Silicon Valley before the bank underwent a bankroll as panic-stricken customers struggled to cash out their savings from the financial institution.
USDC regains 1:1 USD peg as Circle burns $2.34b in 24 hours
USDC lost its 1:1 peg on March 11. According to Nansen, the depeg forced the stablecoin issuer to burn $2.34 billion in USDC in 24 hours to meet redemption requests.
Jeremy Allaire, co-founder and CEO of Circle, said on Twitter that all USDC operations will open for business on March 13. He added that the company had launched a new automated settlement with crypto-friendly bank Cross River to ensure clients’ funds are safe in USDC.
Circle’s USDC is a collateralized stablecoin. For this reason, the firm heavily relies on financial institutions such as banks to accommodate USDC holders safely. Due to this nature of operations, Circle practices full-reserve digital currency banking, thus avoiding the dangers and risks associated with fractional reserve banking.