Coinbase offered $3 billion credit to circle amid SVB turmoil (report)

US-based cryptocurrency exchange – Coinbase – has reportedly offered a $3 billion line of credit to Circle to help mend its financial cracks after the collapse of Silicon Valley Bank .

The stablecoin issuer disclosed a whopping $3.3 billion exposure to SVB, which negatively impacted the price of USDC. The asset dipped well below the $1 target, but then restored its valuation.

Help in an emergency?

According to a recent Fortune blanket, Coinbase was ready to boost Circle with $3 billion. A person familiar with the matter informed that the funds would have guaranteed full liquidity for USDC reserves, ensuring that the stablecoin could be converted into US dollars soon after the Silicon Valley Bank crash.

The entities were on the verge of closing the deal, but moved back once the USDC reestablished its peg against the greenback. It happened after Circle published a reassuring declaration, pledging to cover the possible losses of the investors due to the crisis of the SVB:

“In this case, Circle, as required by stored-value money transmission law and regulation, will stand behind the USDC and cover any shortfalls using company resources, involving outside capital. if necessary.”

In addition, major financial watchdogs in the United States promised to rescue every depositor at SVB, even those with exposure over $250,000.

President Biden also discussed the crash with the former banking giant, describing that “no loss will be borne by the taxpayers”. On the other hand, the investors and shareholders of the failing institution will have no protection since “that’s how capitalism works”.

Move to other banks

CEO Jeremy Allaire recently suggests that his company did not need help from regulators since it was willing to use its own funds to avoid further problems related to exposure to SVB. He also added that the cash reserves had been transferred to the Bank of New York Melon:

“Fortunately, we didn’t need to do that. We transferred all of our assets to Bank of New York Melon, as well as held in the Circle Reserve Fund, which are short-term treasury bills managed by Blackrock.

The stablecoin issuer also has disclosed it could add additional banking partners and improve redemption services after the latest setback caused by the demise of the SVB:

“Circle has worked tirelessly to relaunch services with alternative banking partners, particularly USDC payment and redemption services. We would like to thank our customers for their patience during these unprecedented times.”