Circle has developed “enhanced relationships” with various banking partners, including BNY Mellon, to aid in the redemption of USDC. Bank of New York Mellon currently offers custody services to Circle’s reserves.
It was a tumultuous weekend as Circle’s USDC stablecoin deviated from its peg to the US dollar. However, a sequence of actions taken by regulators and banks restored trust in the token.
Hence, Circle released a statement over the weekend to assure holders that its USDC reserves are secure. The company also announced its plan to finalize the transfer of the outstanding cash from SVB to BNY Mellon.
Circle And SVB’s collapse
According to Circle’s statement, the company was not involved with Silvergate. The cryptocurrency-friendly financial institution (Silvergate) disclosed its decision to sell off its assets as part of a federal regulatory takeover.
The recent upheaval of USDC during the weekend was only a fragment of a more extensive financial crisis that originated from the failure of Silicon Valley Bank–the 16th leading financial institution in the US. Before its collapse, SVB had been a crucial financial institution for the technology and venture capital sectors.
As SVB collapsed, panic ensued as numerous businesses, including Circle, could not access billions of dollars worth of deposits. Nonetheless, the Federal Reserve and the nation’s regulatory bodies alleviated the situation by declaring that depositors at SVB would receive full compensation.
The Trigger Of Events
The move by the US Fed and financial regulators restored investors’ confidence and market stability. Following the collapse of SVB last week, USDC experienced a drop below its dollar peg, plummeting to as low as 86 cents on Saturday, per various on-chain data.
Circle had earlier disclosed that $3.3 billion of its cash reserve were with Silicon Valley Bank. However, the company has now moved $5.4 billion of its total cash reserve of $9.7 billion to BNY Mellon. Circle keeps making moves to prevent its stablecoin from losing its peg.