As the Silicon Valley Bank (SVB) faces closure and receivership, there is uncertainty over whether deposit holders will receive a full return of their funds. In the event that the Federal Deposit Insurance Corporation (FDIC) issues IOUs or receivership certificates, it could take some time before any return is made.
Circle, which is heavily affected by this situation, is required by law to cover any shortfall in its USDC stablecoin. In the event that SVB is unable to return 100% of deposits, Circle has stated that it will cover the shortfall using its corporate resources, and may seek external capital if necessary.
This move by Circle is in line with its commitment to maintaining the stability and reliability of its USDC stablecoin, which is widely used in the cryptocurrency market. By offering this reassurance to its users, Circle aims to mitigate the potential impact of the SVB closure and receivership on the wider market.