USD Coin's 36-Hour Struggle to Maintain Peg Leaves Circle's Reputation in Tatters
USD Coin's 36-Hour Struggle ...
Subscribe to Newsletter

USD Coin's 36-Hour Struggle to Maintain Peg Leaves Circle's Reputation in Tatters

14 March 2023
2 min.
USD Coin's 36-Hour Struggle to Maintain Peg Leaves Circle's Reputation in Tatters

Weekend raises risk of regulatory scrutiny

Circle’s USD Coin, the world's second-largest stablecoin, took around 36 hours to fix its peg to the dollar after a liquidity crisis. While the token has been redeemed for cash, its reputation with regulators remains in question.

Regulators had their hands full with the largest US bank failure in a decade and the crypto sector's struggles. The crisis occurred after it was revealed that 8% of the reserves supporting the USD Coin were stuck at a failed lender, Silicon Valley Bank. This was a bad time for Circle, as its risk management practices were scrutinized when regulators are already paying attention to stablecoins and their issuing companies.

Circle had a good year, ending 2022 with $274 million in total revenue and reserve interest income and $43 million in net income, as well as nearly $400 million in unrestricted cash. The company also benefited from rising usage and increasing interest rates.

However, on Friday, the company disclosed that approximately $3.3 billion of USD Coin's approximately $40 billion in reserves were with the failed bank. Panic-selling ensued, causing the token to lose its peg to the dollar, falling to under 85 cents before recovering. By Sunday night, the token had largely recovered due to Circle's statement that it would cover any potential shortfalls and the government's promise to compensate depositors of failed banks.

Circle CEO Jeremy Allaire said that the company was in "active" conversations with US regulators over the weekend and that regulators want to make sure things are functioning as required. Circle was able to access SVB deposits on Monday.

Stablecoins such as USD Coin provide a way for traders to get in and out of more volatile coins like Bitcoin and Ether without having to switch between crypto and fiat currencies. The SEC has referred to stablecoins as "the poker chip" powering speculative crypto casinos, and recently notified Paxos Trust Co., which issues the Binance-branded BUSD token, that it was considering legal action. Circle maintains that its stablecoin is a payment mechanism rather than a security.

Regulators are concerned about the one-to-one backing of stablecoin reserves, which may raise questions about the way Circle manages its assets and assesses its financial partners.

Persons1 and Companies5 in the news

CEO and founder of Circle
1 place
1 place
3 place
4 place
Source foto:
Rating companies
15 Mention
14 Mention
13 Mention
JP Morgan Chase
11 Mention
Ford Motor Company
11 Mention
10 Mention
8 Mention
White House
7 Mention


News from is the freshest and most relevant information about high-profile events in the region. The task of the resource's news feed is to convey to readers with maximum accuracy and objectivity information about important events in business, politics, economy, healthcare, culture and other spheres of life in New York. news is a coverage of economic processes taking place in New York, the latest news of public life, incidents and an overview of political events. New York news is information about the activities of small and medium-sized businesses, the work of housing and communal services and utilities, the implementation of significant projects.
The site's journalists describe not only the life of the region, but also talk about the current state of the US economy. Everything you need to know about innovations in the field of industry and agriculture, economy and power is collected in the "News" section at
New York news quickly informs the reader, shows the real picture and opens up hot topics. Communication with government structures and business enables us to provide our readers with reliable, information-rich material. The main page of the portal contains the key news of New York!
Alena Potapova

Development Director
Died this year
Born this year