Circle CEO Jeremy Allaire described the recent banking crisis in the United States as ‘dramatic’ and ‘challenging’. He said panic emerged in the market last week and manifest in closure of banks and the Federal Deposit Insurance Corporation (FDIC) stepped in. The CEO said liquidity crisis in the macro environment emerged due to asset imbalances with rising interest rates. Despite USDC’s depegging issues when the banking crisis began last week, the stablecoin is now almost back to $1 value while the crypto market saw one of the biggest rallies in recent times that took Bitcoin price to its highest level since June 2022.
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Circle Was In Bank Transition When SVB Was Closed
Allaire said his company began to work with the Bank of New York Mellon, which holds $24 trillion of assets. In the wake of all the FUD around Silvergate Capital, Circle began moving cash into the Bank of New York Mellon on 9 March 2023, the Circle CEO explained. But immediately after this, the Silicon Valley Bank was seized by California regulators, effectively blocking $3.3 billion in USDC reserves in the failed bank. He added that stablecoins need to be strictly supervised to prevent any negative market effects.
Allaire said legislation around stablecoins should be able to provide foundational backing and payment system access. Supervision should ensure better reserves and a model to allow new companies to come in to the crypto ecosystem. The USDC price is now at $0.99 currently.
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