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Jeremy Allaire, chief executive of Circle Internet Financial Inc. Photo by Bloomberg.

One of Crypto’s Last Safe Havens Is Spiraling After Silicon Valley Bank Implosion

Photo: Jeremy Allaire, chief executive of Circle Internet Financial Inc. Photo by Bloomberg.

Silicon Valley Bank’s collapse is sending shockwaves through a key piece of the crypto industry’s financial plumbing.

The price of stablecoin USDC tumbled at one point lower than 88 cents Saturday morning, below its theoretical $1 peg, after its issuer, Circle, disclosed it has billions in cash on deposit at failed Silicon Valley Bank. While Circle has money on deposit with several other banks, the revelation raised questions about its ability to meet redemptions.

The situation has unnerved investors because stablecoins serve as the money-market funds of the crypto world, acting as a safe haven for traders with funds that need to be parked for a while. In that sense, USDC’s price fall is akin to a money market fund sharply losing value. Adding to the uncertainty, big crypto exchanges Coinbase and Binance have stopped customers from cashing out of USDC through at least the weekend, so the big question is what happens come Monday.

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