Circle redeemed $2.9 billion worth of USDC since Monday

Circle, the issuer of the second-largest stablecoin by market capitalization, said it’s now ready to handle the USDC stablecoin redemptions after it regained access to the $3.3 billion locked up in Silicon Valley Bank. Since Monday morning, the American startup has redeemed $2.9 billion USDC and minted new tokens worth $700 million.

As revealed in a blog post, Circle has restored USDC liquidity and resumed its regular operations, including bringing on new transaction banking partners. Moreover, the company now holds the cash portion of USDC reserves at BNY Mellon, except for limited funds held at other banking partners to support minting and redemption requests.

The statement further states that the majority of the reserve is invested in the Circle Reserve Fund, managed by BlackRock and custodied at BNYM, which is principally comprised of short dated U.S. Treasuries.

“Since the failures of Signature Bank and Silvergate Bank, our core transaction banking partners, our teams have been working around the clock to. We began processing minting and redemption requests on Monday morning, March 13, when the U.S. banking system re-opened, and are currently working through the backlog. We have more to do here, including adding new transaction banking partners with 24/7/365 capability, and we will keep our community posted on our progress,” it said.

Circle’s token lost its dollar peg last week and slumped to an all-time low of $0.8 per coin after the issuer revealed it has nearly 9 percent of its $40-billion USDC reserves stuck at Silicon Valley Bank. However, the stablecoin then recovered most of its losses (now trading at a spot price of $0.9992) after Circle assured investors it would honor the peg despite exposure to failed bank.

The Boston-based firm said that in the event Silicon Valley Bank does not return 100% of deposits, it will cover any shortfall in the assets backing its stablecoin using corporate resources, involving external capital if necessary.

“However, it is also possible that SVB may not return 100% and that any return might take some time, as the FDIC issues IOUs (i.e., receivership certificates) and advanced dividends to deposit holders,” Circle said.

According to its latest breakdown, dated as of December 31, 2022, Circle held 100% of its $44.5 billion reserves in cash and cash equivalents. Specifically, short-term United States Treasuries formed the majority of its cash equivalents category with $34 billion or a 75 percent share. The company also reported $10.5 billion in cash held at regulated financial institutions in the US.