- Circle CEO Jeremy Allaire has stated that USDC will be supported through external capital if necessary.
- The Circle executive revealed that the company had initiated a transaction to transfer $3.3 billion out of Silicon Valley Bank.
- Allaire believes that the entire $3.3 billion exposure to SVB may be recoverable.
- The FDIC may allow the transfer to settle since it was initiated before SVB was shut down.
Jeremy Allaire, the man at the helm of Circle Internet Financial, took to Twitter recently to address the concerns of USDC investors and other stakeholders in the crypto industry, following the collapse of Silicon Valley Bank. In a lengthy Twitter thread, the CEO clarified that despite the issuance and redemption of USD Coin being suspended for the weekend, the stablecoin was available for on-chain transactions.
Circle CEO: Will support USDC through external capital if necessary
According to Jeremy Allaire, 23% of USDC is collateralized with $9.7 billion in cash. Last week, $5.4 billion were moved to the Bank of New York Mellon in order to reduce bank risk. This was followed by a transaction on 9 March (Thursday) to transfer $3.3 billion held in Silicon Valley Bank to other banking partners. However, the transfer was not settled as of close of business Friday, which is when the Federal Deposit Insurance Corporation (FDIC) was given receivership of SVB after it was shut down by the California DFPI.
Allaire believes that the USDC issuer may be able to recover the $3.3 billion that is currently stuck at SVB. He cited FDIC policy which allows for transfers initiated prior to a bank entering receivership to be processed normally.
The FDIC should allow transactions to settle in the ordinary course through the end of a bank’s standard daily processing cycle until the FDIC takes control of the failed institution.”Jeremy Allaire, CEO of Circle Internet Financial
However, Jeremy Allaire added that the downed bank may not return 100% of the funds owed to the USDC issuer and that returns themselves may take some time. The Circle CEO assured that in such an event, the USDC issuer would stand “behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.”