BNY Mellon To Receive $3.3 Billion In Cash Held By Stablecoin Issuer Circle

Circle, the company responsible for creating the world's second-largest stablecoin, USDC, announced on Sunday that it will transfer $3.3 billion in cash held at the collapsed Silicon Valley Bank to BNY Mellon on Monday, once the funds are available, the company's chief executive Jeremy Allaire said in a tweet.

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After Silicon Valley Bank was shut down on Friday in the second-largest bank failure in the history of the U.S., US financial regulators announced on Sunday that depositors at the bank would have access to "all their money" starting Monday.

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Approximately 8% of USDC's more than $40 billion in reserves are in the form of the $3.3 billion in cash held at Silicon Valley Bank, Circle said on Saturday.

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On Sunday, USDC USDCUSD, +2.88%, which is supposed to maintain a one-to-one peg against the U.S. dollar, rebounded to 99 cents after the cryptocurrency dropped to as low as 86 cents on Saturday, according to CoinDesk data, after falling as low as 86 cents on Friday. USDC investors cashed out over $2.6 billion of USDC in the 24 hours leading up to 3 a.m. on Saturday.

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A number of crypto market participants had earlier expressed concern that the de-pegging of USDC would shake up the market, which is still recovering from the collapse of FTX and other crypto companies earlier this year.

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As CoinDesk data shows, Bitcoin BTCUSD, +7.74% rallied 10% to around $22,560 on Sunday, though it is still down more than 65% from its all-time high, according to the data gathered by the exchange.

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Circle will be unable to process minting and redemption of USDC through SigNet, Signature Bank's real-time payment platform, SBNY, -22.87% according to Allaire, after state authorities closed the New York-based bank on Sunday, as a result of state authorities shutting down the bank.

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It seems that Circle will be relying on settlements through BNY Mellon BK, -3.57%, in order to meet its obligations.

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“It is possible that we will introduce a new transaction banking partner with automated minting and redemption as soon as tomorrow,” Allaire stated on Sunday.

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Several crypto companies, including Circle, have used Signature Bank as a trusted banking partner, particularly after a crypto-friendly bank, Silvergate Bank, announced on Wednesday that it will be shutting down operations.

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The company said that Signature Bank provides deposit services for its clients’ digital assets, but the bank does not invest in them, does not trade them, does not hold any of them on its own balance sheet nor does it provide custody of them, and does not lend against or make loans secured by these assets.