USD Coin ( USDC-USD ) lost its peg to the dollar, touching an all-time low on Saturday, after the firm behind the coin, disclosed that some of the reserves backing the purported stablecoin were held at Silicon Valley Bank, which failed on Friday. The second-largest stablecoin traded at $0.92, -7.7% , at 11:02 AM ET, Saturday, and touched as low as $0.84, according to CryptoCompare. Stablecoins are intended to be pegged to a fiat currency, such as the U.S. dollar. USD Coin is an asset-backed stablecoin that's intended to equal a U.S. dollar. Circle's website says "every digital dollar of USDC can always be exchanged 1:1 for cash." Circle said $3.3B of the ~$40B of USDC reserves remain at the failed bank, via tweet. The Federal Deposit Insurance Corp. closed Silicon Valley Bank, owned by SVB Financial ( NASDAQ: SIVB ), after the bank was overwhelmed with requests for deposit withdrawals. While SVB is an FDIC-insured institutions, only $250K per account is insured by the FDIC. In a note on Friday, USB analyst Erika Najarian said 97% of SVB's deposit accounts have balances exceeding $250K. "Silicon Valley Bank is one of the six banking partners Circle uses for managing the ~25% portion of USDC ( USDC-USD ) reserves held in cash," the company said . "While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally." The FDIC said it will pay uninsured depositors and advance dividend within the next week and will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments will be made to uninsured depositors. On Friday, Circle said i t held $9.9B of cash at U.S. regulated financial institutions as of Jan. 17, including at Silicon Valley Bank. Last week it had pulled its "small percentage of USDC reserve deposits held at Silvergate ( SI ) to other banking partners. Recall that on March 8, Silvergate Capital decided to wind down operations and liquidate Silvergate Bank, part of the aftermath of the collapse of Sam Bankman-Fried's FTX.
