Cryptocurrency investors have withdrawn a net $3 billion in Circle’s USDC coin this week.
Circle said on its blog Wednesday (March 15) evening that it had “cleared substantially all of the backlog of minting and redemption requests” for its coin, the second most popular cryptocurrency. Between Monday and Wednesday, Circle redeemed $3.8 billion in USDC while minting $800 million.
The announcement followed an effort by Circle to recover $3.3 billion in funds that were held at Silicon Valley Bank (SVB) when that bank was shut down and taken over by regulators. The news caused USDC to lose its dollar peg over the weekend, with its value dipping as low as 86 cents over the weekend.
“The events of the past week have impacted the liquidity operations for USDC,” Circle said in the blog entry.
“Circle has worked tirelessly to re-initiate services with alternative banking partners, particularly payment and USDC redemption services. We would like to thank our customers for their patience during these unprecedented times.”
Circle says it has gone live with a new banking partner for wire transfers in the U.S., as well as international transfers to 19 countries. The company said it expected to bring more services back online Thursday (March 16).
As PYMNTS wrote earlier this week, Circle’s troubles could lead to greater demand for stablecoin regulations.
The Securities and Exchange Commission (SEC) has already made some moves into the stablecoin space. For example, last month, the commission sued the company behind TerraUSD for fraud and notified Paxos Trust that it was considering taking action and alleging that its BUSD token is an unregistered security.
As noted here in February, those moves were among a number of recent warning shots issued against the digital asset industry by SEC Chairman Gary Gensler, each with huge potential implications for the crypto landscape.
This week also saw reports that crypto companies had begun looking for banks outside the U.S. following the collapse of SVB and Signature Bank and the liquidation of Silvergate Bank, banks that were known for their dealings in the crypto business.
“The two biggest crypto friendly banks are gone,” crypto hedge fund executive Marco Lim told Bloomberg News. “I’ve been through too many crises.”
Lim, managing partner at Mai Capital, spoke to Bloomberg after he’d spent the day scrambling to open bank accounts in Hong Kong to find alternatives to its Signature account.
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