If you have logged on to Twitter this morning there is a good chance you will see all things crypto on your trending page. Over the past year when this happens it's not been good news and today is no different. USDC is trending for all the wrong reasons.
USDC's creator Circle said about $3.3 billion, or more than 8% of over $40 billion USDC reserves, are held at Silicon Valley Bank, which collapsed on Friday as investors created a 'run on the bank'.
There's been ton of stable coin drama over the past year and investors are fearing that USDC could be the next Luna or even cause exchanges like Binance to fall like FTX. Binance and Coinbase both have had to go to Twitter to comment on the USDC situation.
These comments are in response to investors cashing out more than $2.3 billion USDC in the 24 hours. While most of the USDC reserves are invested in Treasuries, close to $9 billion of them were held in cash at banks including:
- Bank of New York Mellon BK
- Citizens Trust Bank
- Customers Bank
- New York Community Bank
- Signature Bank SBNY
- Silicon Valley Bank
- Silvergate Bank
Silicon Valley Bank on Friday became the first major bank since the global financial crisis in 2008 to be taken over by the Federal Deposit Insurance Corp (FDIC) showing the instability of the finical system. The FDIC has taken over more than $175 billion in deposits at Silicon Valley Bank. For those of us that are familiar with traditional banks the FDIC’s standard insurance covers up to $250,000 per depositor so there's a lot of uninsured assets. This situation is very fluid and to add insult to injury. Silvergate shared on Wednesday that it would wind down operations and voluntarily liquidate its bank division, which will cause problems for the larger digital asset ecosystem and compound this USDC issue.