The world of cryptocurrency has been channel towards bringing ease to users in the financial sector. And with the continuous growth in number of users, the more the safety and reliability is required.
The digital currency (cryptocurrency) grow in it number of asset which brings about price fluctuations and a need to tie it to a fiat currency or a commodity (Stablecoin). That is, they should have a price fixed to a reserve asset for its stability.
Base on the developments in the crypto world, the USD Coin (USDC) is a stablecoin redeemable on a 1:1 basis for US dollars, backed by dollar denominated assets held in segregated accounts with US regulated financial institutions. It’s designed to make transactions faster and cheaper than traditional payments while reducing the volatility typically associated with cryptocurrencies like Bitcoin.
Through providing assurances that token holders can redeem one USDC for exactly one US dollar at any time, the potential for price speculation is significantly reduced – resulting in a crypto asset that maintains a fixed value.
The take of U.S crypto friendly bank on USDC
Top crypto friendly bank in the united state have been facing some setback recently due to customer outrage and risk decisions taken by the bank.
These set back led to the collapsed of some bank giants like silvergate, Silicon Valley Bank and Signature Bank.
After the Circle confirmed it had been holding $3.3 billion of its reserves at the collapsed Silicon Valley Bank (SVB). Many USDC holders suspected potential consequences from the SVB crash and quickly redeemed over $1 billion of USDC for U.S. dollars, and this led to the USDC price to lose the peg.
In view of the the collapsed, USDC market capitalization dropped to the lowest point over the past year, to $39.5 billion (USDC’s highest point was last summer at $55.9 billion).
The crises facing the crypto friendly banks makes it impossible for USDC holders to be ascertained of the safety of their stablecoin and with massive withdrawal the price crash on both centralised and decentralised exchange, it was reported that, USDC holders are willing to sell at whatever price just to redeem their USDC to other coin.
The crypto friendly bank played a big role in the world of cryptocurrency and with the recent crash of three major bank(Signature bank, Silicon Valley Bank, and silvergate), the effect of the market have not been friendly as many of the stablecoin are trying to regain there stand.