Crypto investors pull $3 billion from stablecoin USDC in three days

By Elizabeth Howcroft

LONDON (Reuters) – Crypto investors pulled nearly $3 billion overall from stablecoin USDC in three days, the company behind the token said in a blog post on Thursday, as investors rushed to redeem their holdings in the wake of the Silicon Valley bank’s collapse. .

The USDC broke its dollar peg on Saturday after CIRCLE revealed that $3.3 billion in currency reserves are held at the SVB.

According to CoinGecko data, the stablecoin fell below $0.88, but rebounded to $1 on Monday. CIRCLE announced that it will allow automatic USDC redemption through a new banking relationship with Cross River Bank.

Stablecoins are cryptocurrencies designed to maintain a fixed exchange rate with traditional currencies. USDC is the second largest stablecoin with a market cap of $37.6 billion.

From Monday to Wednesday, Circle processed $3.8 billion in USDC redemptions (investors swapping their tokens for US dollars) and generated another $0.8 billion in tokens, Circle’s blog post said, meaning investors pulled in a total of $3 billion in three days.

The rapid outflow comes after US banking regulators issued a fresh warning last month that crypto-related deposits in banks could be subject to liquidity risk. Regulators have highlighted deposits linked to stablecoins as susceptible to volatility during market stress if there are rapid redemption requests.

Last week, investors pulled a net $6 billion from the coin, according to CoinGecko data.

“The events of the past week have impacted USDC’s liquidity operations,” Circle said

“We will continue to strive to add additional transaction banking partners.”

(Reporting by Elizabeth Howcroft; Editing by Sharon Singleton)