Crypto investors withdrew a total of about $3 billion (about Rs. 24,840 billion) from stablecoin USDC in three days, the company behind the token said in a blog post on Thursday, as investors rushed to clear their holdings following the collapse repay by Silicon Talbank.
USDC broke its dollar peg on Saturday after Circle revealed that $3.3 billion (approximately Rs. 27,330 crore) of the coin’s reserves were with SVB.
The stablecoin fell as low as $0.88 (roughly Rs. 70), according to CoinGecko data, but bounced back to $1 (roughly Rs. 80) on Monday. Circle announced that it would enable automatic USDC redemption through a new banking relationship with Cross River Bank.
Stablecoins are cryptocurrencies designed to maintain a constant exchange rate with traditional currencies. USDC is the second largest stablecoin with a market cap of $37.6 billion (roughly Rs. 3,11,350 crore).
From Monday through Wednesday, Circle processed $3.8 billion worth of USDC redemptions (approx. That means investors withdrew a total of around $3 billion over the three days.
The rapid outflows come after the U.S. Banking Commission issued another warning last month that crypto-related deposits with banks could be subject to liquidity risks. Regulators highlighted deposits linked to stablecoins as prone to volatility during times of market stress when there is a rapid influx of redemption requests.
Over the past week, investors have net extracted $6 billion (around Rs. 49,685 billion) from the coin, according to CoinGecko data.
“The events of the past week have impacted liquidity operations for USDC,” Circle said.
“We will continue our efforts to add more transaction banking partners.”
© Thomson Reuters 2023