Stablecoin Redemption Begins As 314 Million USDC Moves To Unknown Wallet

The crypto industry is on the verge of recovering from the stablecoin dollar incident that has rocked the USD Coin (USDC) token. Per the Web3 analytic platform, Watchers, an anonymous Ethereum address, received about 314.2 million USDC from Circle, the USD Coin issuer.

Null Ethereum Wallet Sees 314 Million USDC

The amount of USD Coin sent by Circle to the unnamed Ethereum address caused the stablecoin to regain its USD peg. The null wallet withdraws assets from circulation through a single transaction.

In a joint statement, the US Treasury Secretary, Janet Yellen, and other federal regulators announced that depositors with the troubled Silicon Valley Bank (SVB) would be paid.

Cypher Mind HQ

Commenting on the issue, Jeremy Allaire, CEO of Circle, noted that the trust, safety, and redeemability of the USD Coin to USD is the point of focus for the firm amid the ongoing contagion in the crypto market. Allaire noted that it is refreshing to see the US government and other regulatory agencies wading in to stop the risks from spreading into the banking sector.

It is worth noting that the USDC’s tokenemics is influenced by its collateral in fiat currency in a proportion of the assets minting and burning. USD Coin suffered a momentary lapse following its depeg from the dollar after SVB, its custodian bank, experienced a bank run that forced the Federal Deposit Insurance Corporation (FDIC) to intervene.

At the time of writing, USDC has fully regained its peg compared to its previous low of $0.87 on Friday.

Will The US Bank Crisis Impact Crypto?

Compared to the FTX collapse in November 2022, the Silicon Valley Bank (SVB) fallout has yet to trigger an industry-wide implosion. By comparison, regulators can easily contain the collapse of SVB.

But, analysts believe that it is unlikely the aftermath will cause long-term damage to the crypto industry. However, there will likely be short-term effects that see crypto firms navigating a rough terrain as they attempt to find banking services in the US.

Still, experts noted that it is not just the United States that experienced turmoil over the past few days. According to Thiago Cesar, the founder of the fiat on-ramp platform Transfero Group, the fallout of the Silvergate Bank crisis would pose a serious issue to Latin America’s financial ecosystem.

In Latin America, most people use stablecoins like USDT and USDC to transfer money abroad. Hence, most LATAM residents would feel the long-term effects of the SVB collapse more than other regions.

Cypher Mind HQ

Meanwhile, market observers note that most US-based crypto firms may have to partner with new banks, even though many would hesitate to have crypto exposure.

Author: Owen Clark

Owen Clark, a seasoned crypto newsman and broker, deciphers the intricacies of the digital currency realm, empowering investors with his astute analysis and actionable insights.

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