Circle to ‘Cover Any Shortfall’ in USDC Reserves, Sparking Stablecoin Rally

Circle Internet Financial said Saturday it will “cover any shortfall” in the assets backing its stablecoin USDC in the event it does not receive the entirety of a $3.3 billion cash reserve it was holding at Silicon Valley Bank.

In a blog post, Circle said it “will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.”

The pledge came as crypto traders fretted over the value of USDC, a stablecoin meant to be pegged to the U.S. dollar but which fell in value after Silicon Valley Bank’s collapse. Circle was holding $3.3 billion of USDC’s cash backing at Silicon Valley Bank when the FDIC seized the bank’s assets on Friday.

Circle said it attempted to move its assets out before SVB’s collapse and that the transaction could settle on Monday, when U.S. banks resume normal operations.

“However, it is also possible that SVB may not return 100% and that any return might take some time, as the FDIC issues IOUs (i.e., receivership certificates) and advanced dividends to deposit holders,” Circle said.

The value of the stablecoin fell as low as 88 cents in the last 24 hours, before rebounding to 97 cents, after the announcement, according to CoinGecko.