Crypto exchange Coinbase offered Circle an instant line of credit during the weekend of Silicon Valley Bank’s (SVB) collapse.
According to a Monday report from Fortune, Coinbase was ready to provide Circle with $3.3 billion to guarantee full liquidity for USDC’s reserves after the stablecoin lost its peg to the U.S. dollar.
The planned backstop may have stabilized the market for USDC at the time, seeing as most of the market panic was driven by Circle’s revelation of having 10% of its reserves stuck at SVB.
Of course, the two crypto firms never got around to executing this arrangement, despite being on the brink of making an announcement, thanks to the Federal Deposit Insurance Corporation’s (FDIC) intervention.
When then FDIC announced that all SVB depositors would be made 100% whole, USDC climbed back to its dollar-peg within a few hours.
Coinbase’s willingness to provide Circle aid in its hour of need is hardly surprising, considering its partnership with the stablecoin issuer that dates back to 2018. The two firms established the CENTRE consortium to tokenize and redeem USDC into dollars through both platforms.
“This is the first time Coinbase has supported a stablecoin, which is fundamentally different from other cryptocurrencies. Unlike bitcoin or ether, a USDC is meant to represent a single US dollar (USD) that does not move up or down relative to its reference currency,” said Coinbase in an announcement at the time of its launch.
USDC’s market cap has fallen from ahead of $43 billion on March 10 to around $35.3 billion at the time of writing. Despite its USD-peg being restored, the stablecoin’s market cap has been on a continuous decline. Meanwhile, rival stablecoin issuer Tether’s USDT has seen a $6 billion increase in market cap over the same period.