Amid the turmoil surrounding Silicon Valley Bank’s decision to pull out of the cryptocurrency industry, Coinbase reportedly offered a $3 billion credit to Circle. This move signals Coinbase’s willingness to step in and offer support to companies affected by the bank’s actions. The credit offered to Circle, a major crypto firm, could provide much-needed stability during a time of uncertainty for the industry. This news is likely to draw attention from those interested in the cryptocurrency market and the impact of banking regulations on the nascent sector.
Coinbase Offers $3 Billion Line of Credit to Circle After Silicon Valley Bank Collapse
Circle, the stablecoin-issuer revealed a whopping $3.3 billion exposure to Silicon Valley Bank (SVB), which negatively affected the price of USDC. The asset plunged way below the $1 target but later restored its valuation. In response to the situation, the US-based cryptocurrency exchange, Coinbase, offered a line of credit worth $3 billion to Circle to help it fix its financial cracks after the collapse of SVB.
Help Amid the Emergency?
According to a recent Fortune coverage, Coinbase was ready to stimulate Circle with $3 billion. A person familiar with the matter informed that the funds would have guaranteed full liquidity for USDC reserves, assuring the stablecoin could be converted to US dollars shortly after the crash of Silicon Valley Bank. However, the entities were close to completing the deal but reverted once USDC restored its peg against the greenback. This happened after Circle issued a reassuring statement, vowing to cover any investor losses due to the SVB crisis.
Shifting Toward Other Banks
Circle CEO, Jeremy Allaire recently hinted that his company did not need regulators’ help since it was ready to use its own corporate funds to prevent further problems from the exposure to SVB. He also added that cash reserves had been moved to Bank of New York Melon.
The stablecoin issuer also disclosed that it might add additional banking partners and improve redemption services after the latest setback caused by the SVB demise. Circle has worked tirelessly to re-initiate services with alternative banking partners, particularly payment and USDC redemption services. They would like to thank their customers for their patience during these unprecedented times.
Collaboration between different entities within the crypto ecosystem has been observed to provide support when necessary, particularly during emergencies. The recent offer of a $3 billion line of credit worth to Circle by Coinbase is an excellent example of how collaboration can help in moments of crisis, mitigating the ripple effect across the entire industry.