Despite the weekend’s financial crisis, Circle has taken significant steps to ensure its customers’ security and the stability of its stablecoin.
Circle has made an announcement of a new banking partner following Silicon Valley Bank’s failure. The company is now expanding ties with BNY Mellon and has named Cross River Bank as its new commercial banking partner for producing and redeeming USD Coin (USDC). Cross River Bank is recognized for its services to fintech and crypto firms such as Visa and Coinbase.
To assist with USDC redemption, Circle has also “expanded relationships” with other banking partners, including Bank of New York Mellon (BNY Mellon), which already provides custody services for Circle’s reserves. However, this announcement comes after a harrowing weekend where Circle’s flagship USDC stablecoin broke its peg to the dollar, dropping below $0.90 early on Saturday.
Fortunately, a series of moves by banks and regulators restored confidence in the token, and as of the time of publication, USDC has recovered and trades at $0.99. During the weekend, Circle issued a press release confirming that 100% of USDC reserves are safe and secure.
The company also assured its customers that the remaining Silicon Valley Bank (SVB) cash will be transferred to BNY Mellon, and liquidity operations for USDC will resume at banking open on Monday.
Circle’s announcement also mentioned that the company had no exposure to Silvergate, the crypto-friendly bank that announced it would voluntarily liquidate its holdings as part of a takeover process by federal regulators.
This weekend’s USDC turmoil was part of a broader financial catastrophe that started with the collapse of SVB, the 16th-largest bank in the United States and a financial pillar of the tech and venture capital world.
As thousands of companies, including Circle, could not access billions in deposits due to the failure of SVB, it triggered a panic. However, the Federal Reserve and other agencies calmed markets by announcing depositors at SBV would be made whole.
Circle has taken significant steps to ensure its customers’ security and the stability of its stablecoin despite the weekend’s financial crisis. The company’s partnership with Cross River Bank and BNY Mellon is part of its effort to rebuild and strengthen its banking relationships.