Circle will cover funds shortfall caused by Silicon Valley Bank collapse

ambcrypto.com:

Circle – the company issuing leading stablecoin, USDC – has issued another statement on the state of its cash reserves stuck with Silicon Valley Bank (SVB). The USDC issuer stated that there was a possibility of the firm not gaining back 100% of the funds. Moreover, it could take time for the company to get them back. And, this is because the “FDIC issues IOUs (ie.e., receivership certificates) and advanced dividends to deposit holders.”

Nonetheless, Circle has assured that it will cover the fund’s shortfall caused by SVB’s collapse. The stablecoin issuer would pool in its corporate resources and even bring in external capital to address any deficiency in reserves.

In its previous statement, Circle revealed the true extent of its exposure to the now-collapsed Silicon Valley Bank. The firm revealed that the failed bank has $3.3 billion of USDC’s cash reserves. The company claimed that it had initiated transfers of billions of dollars of reserves to other banks on Thursday. However, these transfers were not settled as of Friday, and the actual status will be revealed coming Monday.

Notably, in its recent statement, the company expressed confidence in the approval of the transfers. This is because transfers made before the bank entered receivership would be processed normally as per the FDIC policy, Circle said. The statement further read,

“We understand that the FDIC is currently determining the status of transactions initiated prior to the applicable receivership cutoff times, and it is possible that the transfers initiated on Thursday will be processed on Monday.”

Moreover, the funds stuck with SVB amount to a “25% portion of the USDC reserves held in cash.” A majority of the funds are held in US Treasury Bills, which is 77%