Circle, the issuer of stablecoins, stored an unknown quantity of USDC’s currency reserves in the now-defunct Silicon Valley Bank.
After Silicon Valley Bank (SVB), one of Circle’s banking partners, was shut down by authorities on Friday morning, the USDC stablecoin has seen around $1 billion in net redemptions, according to blockchain transactions from the crypto intelligence platform Nansen.
According to Nansen, Circle burnt around $1.6 billion USDC on Friday, removing the tokens from circulation when investors sold dollars. Circle also manufactured new coins, which added to the circulation but was far less than its destruction.
According to CoinMarketCap, USDC’s market value decreased to $42.4 billion from $43.5 billion on Friday. The USDC also de-pegged from $1, a hint of concern about its reserves.
After Tether’s USDT, USDC is the second-largest stablecoin and a pillar of the cryptocurrency ecosystem. According to Circle’s website, U.S. government bonds and cash-like assets guarantee the token’s value, including a total of $11.1 billion in cash deposits at different licensed institutions.
Investors were worried about the durability of the stablecoin after SVB, one of the institutions where Circle stored a portion of USDC’s supporting assets, experienced a bank run. Friday morning, regulators shut down the bank’s activities.
A representative for Circle informed CoinDesk on Friday afternoon that SVB was one of six banks that maintained “the roughly 25% of USDC reserves stored in cash.”
“Although we await clarification on how the FDIC receivership of Silicon Valley Bank will affect the bank’s depositors, Circle and USDC continue to function regularly,” the representative continued.