Circle is major beneficiary of SVB government bailout

A recent report from Bloomberg noted that Circle, the issuer of the USDC stablecoin, became the main recipient of the government-backed Silicon Valley Bank (SVB) bailout.

According to information obtained from the Federal Deposit Insurance Corporation (FDIC), Circle has more than $3.3 billion in reserves at SVB. These reserves are insured by the FDIC, so they are safe.

After SVB declared bankruptcy in March, regulators stepped in to protect the bank’s creditors in an effort to restore public confidence and maintain economic stability. However, as a result of the move, discussions have been reignited about the extent to which the government allows financial institutions to take undue risk.

Circle Internet Financial has the largest deposit at SVB, according to records obtained by Bloomberg from the FDIC under the Material Freedom Act.

During that period, Circle said its securities holdings in banks totaled $3.3 billion. The next big savers are SVB units and Sequoia Capital (a technology-focused venture capital firm). Each of them has donated a little over a billion dollars.

In March, when the public became aware that SVB was at risk, Circle temporarily de-pegged its stablecoin from the U.S. dollar.

Since then, however, the company has fully recovered, as indicated by CEO Jeremy Allaire’s statement at the Consensus conference in April, in which he said they had beefed up their security systems following the incident.

The parent companies of Sequoia Capital, the FDIC and Silicon Valley Bank have remained silent on Bloomberg’s allegations.