Over the last two weeks, the market cap of Circle's USDC stablecoin saw a rapid plunge of $10 billion. Despite the original market sentiment being shaken following a news that Circle had $3.3 billion of reserve funds held in Silicon Valley Bank causing USDC de-pegging from the US dollar, the U.S. federal bank regulators guaranteed the full return of customer deposits. In response to this, Circle CEO Jeremy Allaire stated that operations would resume and the redemptions have continued.

Allaire addressed the concerns in a post on Twitter, claiming that this was a result of a wider de-risking process among investors from projects exposed to U.S. banks and U.S. regulatory risk. He also clarified that USDC had "never failed to mint or redeem USDC for $1, including during the past weeks stress test."

USDC's market cap has gone from around $33.3 billion to $32.8 billion since the incidents, however redemptions in the past 24 hours reached close to $463 billion, with $487 billion burned and just $24.1 million minted. The Block's Director of Research, Steven Zheng, concluded that this may be due to the lack of trust in the stablecoin's reliability.

Allaire continued to assert that USDC's function still remains uninterrupted on public chains, protocols and wallets. With the U.S. Federal Regulatory Authorities ensuring certainty of the investor's funds, it remains to be seen how the situation will unfold in the future. Even though the redemptions have continued, USDC's redemption process still promises to provide customers full U.S. dollar value for their tokens.



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