{"id":379823,"date":"2023-03-12T10:53:07","date_gmt":"2023-03-12T10:53:07","guid":{"rendered":"https:\/\/insidebitcoins.com\/?p=379823"},"modified":"2023-03-12T10:53:07","modified_gmt":"2023-03-12T10:53:07","slug":"theres-no-need-to-panic-about-the-usdc-depegging","status":"publish","type":"post","link":"https:\/\/insidebitcoins.com\/news\/theres-no-need-to-panic-about-the-usdc-depegging","title":{"rendered":"There’s no need to panic about the USDC depegging"},"content":{"rendered":"

Because of worries over the impending destabilization of USDC, a stablecoin backed by US dollars, the cryptocurrency sector is currently in a state of worry.<\/p>\n

In the beginning, it’s important to emphasize that Silicon Valley Bank (SVB)<\/a>, which is in charge of keeping the money supporting USDC, apparently has enough assets to cover all withdrawal requests. SVB has over $209.0 billion in assets and roughly $175.4 billion in deposits as of December 31, 2022, according to data from the Federal Deposit Insurance Corporation (FDIC).<\/p>\n

Nonetheless, despite the impressive asset base, questions remain over the liquidity of SVB’s book and the estimated percentage of a haircut in the event that the bank suffered large losses.<\/p>\n

This uncertainty results from the fact that the bank’s underlying assets are opaque and that it is unclear how dangerous or illiquid they may be. As a result, there is a chance that the bank would find it difficult to fulfill all of its obligations if SVB’s assets suffer substantial losses or turn illiquid, which might lead to a depeg of USDC. Given that USDC is often utilized as a trading pair on many exchanges, this would have a substantial effect on the overall cryptocurrency market<\/a>.<\/p>\n

Second, the financial support offered by Circle, the firm that produces the stablecoin, is a crucial factor to take into account with relation to the stability of USDC. 77% of Circle’s reserves are kept in highly liquid securities like 1-4 month T-Bills, which are managed by Blackrock and kept at BNY Mellon. T-Bills are typically regarded as exceptionally safe and highly liquid investments, therefore this allocation of reserves offers USDC a significant amount of security.<\/p>\n

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Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25% portion of USDC reserves held in cash. While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally.https:\/\/t.co\/NU82jnajjY<\/a><\/p>\n

— Circle (@circle) March 10, 2023<\/a><\/p><\/blockquote>\n