Stablecoin issuer Circle can no longer count on Signature Bank’s “SigNet” for USDC settlements.
In a series of tweets on Sunday, Circle CEO Jeremy Allaire assured users that 100% of USDC reserves were secure and that the firm intends to transfer any remaining cash held at Silicon Valley Bank (SVB) to BNY Mellon.
100% of USDC reserves are also safe and secure, and we will complete our transfer for remaining SVB cash to BNY Mellon.
As previously shared, liquidity operations for USDC will resume at banking open tomorrow morning.
— Jeremy Allaire (@jerallaire) March 12, 2023
Allaire claimed that Circle already has plans to onboard a new transaction banking partner “potentially as soon as tomorrow.” The new partner will reportedly enable automated minting and redemptions. In the interim, Circle will rely exclusively on BNY Mellon for settlements. A few hours later, Allaire revealed the new partner to be Cross River Bank.
Circle’s USDC operations will open for business on Monday morning, including with new automated settlement via our new partnership with Cross River Bank. https://t.co/ybkSEedzrC
— Jeremy Allaire (@jerallaire) March 13, 2023
Cross River also provides banking services for Coinbase and fintech giant Visa. In 2014, Cross River integrated Ripple to facilitate real-time payments between the U.S. and Western Europe.
Allaire’s announcement comes after U.S. regulators moved to ensure all SVB depositors would have their money back, starting Monday. The U.S. Treasury, Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) issued a joint statement on the matter, but not all of it was a cause for celebration for entities like Circle.
The regulators disclosed the shutdown of Signature Bank, whose digital payments platform SigNet facilitated real-time transfers for major crypto firms. As it happens, one of these firms is Circle, which used SigNet to process and mint USDC.
“We’ve long advocated for full-reserve digital currency banking that insulates our base layer of internet money and payment systems from fractional reserve banking risk,” said Allaire. He alluded to the Payment Stablecoin Act, currently being debated upon by Congress, as a law regime that would promote a safer financial system.
Stablecoins accounted for 90% of volumes across major crypto exchanges, according to data from Kaiko. However, with the collapse of the industry’s largest fiat on-ramps Silvergate Bank, and now Signature, the future of converting dollars to digital assets looks increasingly uncertain.
