Circle's USDC stablecoin is experiencing a drop in value after the closure of Silicon Valley Bank.
In Brief
The California Department of Financial Protection announced the closure of Silicon Valley Bank on March 10.
Circle, the issuer responsible for USDC, reported that $3.3 billion of its reserves were tied up in Silicon Valley Bank.
Currently, USDC is trading at around $0.91, reflecting its recent loss of value.
On March 10, the California Department of Financial Protection took action to close Silicon Valley Bank, which had seen about $42 billion pulled out by venture capitalists and their clients just the day before.
Circle, which is responsible for the USDC stablecoin, announced on that Friday that $3.3 billion of its $40 billion reserves were held in Silicon Valley Bank. announced The firm was unable to recover its deposits from Silicon Valley Bank before the market reacted, leading to a decline in USDC's value. As of now, the stablecoin is valued at $0.91, though Circle is working to secure funds and maintain operations, raising hope for a potential rebound to its pegged value of the USD.
It's important to highlight that over the weekend, major exchanges like Coinbase and Binance halted conversions of USDC.
Several companies, including BlockFi, Avalanche, NFT creator Yuga Labs, and Proof, had investments in Silicon Valley Bank. Many startups also had their funds there, but only $250,000 of those deposits are insured. This situation may force numerous tech startups to shut down due to the bank's collapse. As Garry Tan, CEO of Y Combinator, mentioned, this catastrophe could set the industry back by a decade.
Describing the fallout from SVB, some are calling it a catastrophic event for startups.
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Disclaimer
In line with the Trust Project guidelines Valeria, a reporter for Metaverse Post, has her sights set on topics such as fundraising, AI, the metaverse, digital fashion, NFTs, and all things related to Web3.
