Circle’s exposure to US banks could top $9B

USD Coin (USDC) issuer Circle’s exposure to the United States banking system sits near $9 billion, according to its latest audit report from January. Circle’s reserves are held in a number of regulated financial institutions in the country, including Silvergate, Silicon Valley Bank (SVB), and Bank of New York Mellon.

According to the report, the amount held in cash by U.S. regulated financial institutions was $8.6 billion as of Jan. 31, representing roughly 20% of its reserves. Another $33.6 billion of its reserves are held in U.S Treasurys managed by BlackRock through the Circle Reserve Fund, registered as a government money market fund and with funds held by BNY Mellon.

It’s unclear how much of Circle’s cash reserves were held by SVB. Other banks holding the company’s reserves include Citizens Trust Bank, Customers Bank, New York Community Bank, a division of Flagstar Bank, and Signature Bank. USDC is the second-largest stablecoin, with a $42 billion circulating supply as of Jan. 31.

Circle’s January report was reviewed and certified by Big Four accounting firm Deloitte. Cointelegraph reached out to but did not immediately receive a response from Circle before publication.

SVB is one of the biggest lenders in the United States and a major player for venture-backed companies. The bank was shut down on March 10 by the California Department of Financial Protection and Innovation, fueling fears about its future. The Federal Deposit Insurance Corporation was appointed as the receiver to protect insured deposits.

Dave Weisberger, co-founder and CEO of algorithmic-trading platform CoinRoutes, told Cointelegraph that the “fodder for a broader contagion event is there” and that “the spark could be materializing,” putting at risk many startups and tech companies in the country — a critical sector for the “sustained growth of the American economy.”

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Author: Ana Paula Pereira

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