“Banks Are a Risk to Fiat-backed Stable Coins”

After the collapse of US-based banking institution Silicon Valley Bank, stablecoin issuer Circle was adversely affected. The USDC token lost its peg to $1 after Circle announced that its $3.3 billion deposits remained in the bank.

The stablecoin, which should constantly remain stable at 1 US dollar, fell to $ 0.80 the other day, but the problem seems to be over for now. After the events, Binance CEO Changpeng Zhao shared the idea that banks pose a great risk for stablecoins on Twitter.

As the stablecoin issuer’s holding captive in the SVB represents around 8% of the total USDC reserve, investors panicked and started selling their tokens. Within hours, USDC’s market share dropped from 5% to 4%.

As the stablecoin issuer’s holding captive in the SVB represents around 8% of the total USDC reserve, investors panicked and started selling their tokens. Within hours, USDC’s market share dropped from 5% to 4%.