Circle Internet Finance is frantically searching for additional banking partners for its USDC stablecoin.
The issue with Circle Internet Financial’s $3,3 billion cash reserves seemed to be resolved on Sunday when federal authorities pledged that failing Silicon Valley Bank customers would be reimbursed in short order. Nonetheless, Circle’s USDC stablecoin is still in danger.
Signature Bank, a crucial financial institution for the crypto sector and USDC, has recently burned. Signature was shut down by New York state regulators on Sunday “to safeguard depositors,” making it the third crypto-friendly bank to close in four days. CEO of Circle Jeremy Allaire admitted on Twitter that the business could no longer manufacture or redeem USDC using Signature’s Signet product.
Signet, a crucial component of the crypto industry’s back-end infrastructure, is in uncertainty due to the unexpected collapse of Signature. It is a blockchain-based real-time payment system designed to operate around the clock. Circle, Coinbase, and several other crypto-trading organizations used Signet. Yet, with the demise of Signature, Signet has now perished.
When reached on Sunday, Signet personnel claimed they were in the dark about the company’s future but anticipated learning more shortly.
Allaire said in a second tweet that the firm will ” add a new transaction banking partner with automated minting and redemption as early as tomorrow.”
The outcome of Signet may also have implications for Coinbase. Coinbase, another important business for USDC, said in its third-quarter shareholder letter that it has joined Signet to enable real-time payments and settlements. In the message, the firm said, “Users may now add USDC to the Web3 ecosystem in less than 10 minutes.” Coinbase representatives did not respond quickly to a request for comment.
Coinbase halted redemptions between U.S. dollars and USDC on Friday night and said they would restart on Monday when regular banking hours resumed.
USDC lost its peg to the U.S. dollar on Friday, hours after SVB was placed under FDIC receivership, amidst doubt over how much of its cash was genuinely held by the bank. Eventually, Circle disclosed that about 8% of the money supporting USDC, or $3,3 billion, was kept in SVB.
Circle has no USDC reserves with Signature Bank, according to an email from a Circle representative to CoinDesk. As of press time, the USDC has grown closer to restoring its dollar parity, trading at around 99 cents.