Stablecoin USDC sees US$1.7 billion in redemptions after losing dollar peg, even as crypto market rebounds
- Redemptions on Monday represent more than 2 per cent of USDC’s circulating supply, according data compiled by researcher Nansen
- USDC lost its 1-to-1 peg with the dollar last week after Circle said it had US$3.3 billion at collapsed Silicon Valley Bank
Crypto market participants redeemed nearly US$1.74 billion of the stablecoin USD Coin on Monday, according data compiled by researcher Nansen.
That represents more than 2 per cent of USDC’s circulating supply, Nansen said. The outflows come after the stablecoin lost its 1-to-1 peg with the dollar last week when its issuer, Circle Internet Financial, said it held US$3.3 billion – or 8 per cent of reserves supposed to back USDC – at Silicon Valley Bank, which collapsed following a bank run.
Exchanges Binance and Coinbase Global had temporarily halted certain conversions of the stablecoin, which is used to facilitate trading and as a haven from price swings. USDC, which is supposed to be worth around US$1, fell to as little as 85 cents over the weekend.
Circle officials did not immediately respond to requests for comment on redemptions.
Assurances from Circle chief executive Jeremy Allaire and a government plan to return money to all of the bank’s depositors helped restore the peg on Sunday. Still many traders have decided to cash out at the first opportunity even with most cryptocurrencies rallying on Monday.