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USDC Stablecoin Sees Massive $3 Billion Outflows in Three Days – What’s Happening?

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USDC Stablecoin Sees Massive $3 Billion Outflows in Three Days – What’s Happening?

Circle CEO Jeremy Allaire. Source: a video screenshot, YouTube, IMF

Popular stablecoin USD Coin (USDC) saw around $3 billion in three-day outflows this week, issuer Circle said in a blog post on Thursday.

According to the blog post, Circle repurchased $3.8 billion USDC and issued $0.8 billion of new USDC tokens between Monday and Wednesday this week, bringing the net outflow to $3 billion.

Redemptions could easily be seen as a reduction in USDC’s market capitalization:

USDC market capitalization. The $3 billion in releases occurred between March 13 and March 15. Source: CoinGecko

The massive outflows came after reports emerged over the weekend that Circle had $3.3 billion of $40 billion in USDC reserves deposited in Silicon Valley Bank (SVB), now collapsed.

The news caused USDC to temporarily lose its $1 peg price, but US government guarantees that all SVB depositors would be reinstated later helped the stablecoin regain its peg price.

Still, this week’s buybacks are proof that token holders aren’t yet convinced that USDC is completely off the hook yet.

The USDC temporarily lost its peg last weekend. Source: CoinGecko

In its blog post this week, Circle admitted there was a large backlog of buyouts the company needed to deal with, but said it had now “cleared almost all of the backlog”.

“The events of the past week have impacted liquidity operations for USDC. Circle has worked tirelessly to relaunch services with alternative banking partners, particularly USDC payment and redemption services,” wrote the society.

Circle CEO Jeremy Allaire announced on Sunday that a new banking partner is New Jersey-based Cross River Bank, and said the new relationship will help Circle get its automated settlement system back on track.


Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.