• Signature Bank’s sudden failure has left Circle’s USDC stablecoin in limbo, as the bank was a critical financial institution to the crypto industry.
• Circle CEO Jeremy Allaire has announced that they have established a new partnership with Cross River Bank, which will provide automated minting and redemption for USDC stablecoin.
• The collapse of Signature Bank has put a major hole in the industry’s backend infrastructure, and Circle is now working with Cross River Bank to ensure seamless settlement and boost confidence in the stability of USDC.
Impact of Signature Bank Failure
Signature Bank was a key financial institution to the crypto industry, and its sudden failure has left a major hole in the industry’s backend infrastructure. Signet, a blockchain-based real-time payments system that’s supposed to work 24/7, was used by Circle, Coinbase, and many crypto trading firms. But with the death of Signature, Signet, too, is not functional.
Circle CEO Jeremy Allaire confirmed that due to the failure of Signature Bank they had to find a new transaction banking partner for USDC operations. As such, they have established a new partnership with Cross River Bank which will provide automated minting and redemption for USDC stablecoin. This partnership allows them to resume USDC operations starting from Monday ensuring seamless settlement and boosting confidence in the stability of their stablecoin.
USDC lost its peg to the US dollar on Friday following uncertainty about how much of its funds were held in Silicon Valley Bank (SVB). Circle later confirmed that it held $3.3 billion or 8% of the funds backing USDC at SVB but holds no USDC reserves with Signature Bank which was closed by regulators on the same day.
The sudden collapse of Signature bank leaves Circle scrambling for new banking partners for their popular USDC stablecoin but thankfully they have found one in Cross River bank allowing them to continue operations starting from Monday morning while restoring confidence among users regarding their currency’s stability.