Coinbase, the American publicly traded company that runs a centralized cryptocurrency exchange platform, has extended a helping hand to Circle, the USDC stablecoin issuer, by offering a $3 billion credit line. This move comes in the wake of the chaotic collapse of Silicon Valley Bank (SVB), which affected the operations of many businesses, including Circle, as it had over $3 billion in deposits that were stranded in the failed bank’s coffers.
The crash threatened the stability of the U.S. financial system and caused the USDC stablecoin to break from its 1:1 dollar peg after news surfaced that Circle had $3.3 billion in funds stranded at SVB, an amount which is less than 10% of the stablecoin issuer’s total reserve deposits. With the markets in chaos following depositors’ exodus from SVB, Coinbase stepped in to offer Circle a lifeline.
Coinbase not only extended an immediate line of credit to Circle, which guaranteed total liquidity of its USDC reserves following SVB’s collapse, but also assured the stablecoin issuer that the stablecoin could be converted to U.S. dollars by Monday morning. According to Fortune, Circle was preparing to announce the credit facility offered by Coinbase on March 10, but on the same day, regulators dispelled the crisis and lifted the FDIC.
Apparently, Circle did not deny or confirm the Coinbase offer and declined to comment. Before the wire went through, Silicon Valley Bank collapsed on March 10, putting the stablecoin issuer in the same position as all other depositors and businesses who spent several days in limbo thinking about the future of their funds with the fallen bank.
Meanwhile, Coinbase has reportedly told its clients that it is no longer supporting Signet, the real-time payments network of Signature Bank, more than a week after the latter collapsed. Coinbase has assured its users that it is currently looking for a new payment network provider, but its customers who use Signet for U.S. dollar deposits and withdrawals will not be able to do so outside of banking hours. Despite being a former rival of Circle, Coinbase’s support has provided much-needed relief to the stablecoin issuer in a time of crisis.
