• Coinbase reportedly offered a $3 billion line of credit to Circle after the collapse of Silicon Valley Bank.
• The exposure to SVB negatively affected the price of USDC, but it was later restored.
• Coinbase and Circle were close to completing a deal, but reverted once USDC regained its peg against the greenback.
Coinbase Offers Credit Line to Circle
Coinbase was allegedly planning to provide Circle with a $3 billion line of credit in order to assist them following the crash of Silicon Valley Bank. This exposure had caused the price of USDC (their stablecoin) to drop below its target value, but it was able to recover afterwards. Coinbase and Circle were close to finalizing their deal, but reverted back when USDC recovered its peg against the U.S. dollar.
USDC Price Plunge
Circle revealed that they had an astonishing exposure rate of $3.3 billion from SVB which caused USDC’s price to plummet below its intended value. Fortunately, they released an official statement claiming that if need be, Circle would stand behind USDC and cover any losses using corporate resources which could involve external capital if necessary. In addition, U.S financial watchdogs promised that each depositor at SVB would be protected regardless of amount above $250k USD deposited in their bank account(s).
Close Deal Not Finalized
When news broke out that Coinbase was willing to offer a generous loan amounting up to $3 billion dollars for liquidity purposes regarding USDC’s reserves, both parties were near completion on reaching a resolution; however this reverted once their stablecoin managed to regain its foothold against the greenback currency.
Will Other Banks Follow?
This whole ordeal has left people wondering whether other banks will follow suit and potentially grant similar lines of credits in order for cryptocurrency projects such as Circle can continue operating during times like these where there are massive disruptions in global markets due unforeseen events or circumstances taking place elsewhere around the world i.e., pandemics or geo-political tensions rising between nations etc..
Conclusion
Coinbase’s offering towards Cirlce is seen by many as a sign that trust is being established between traditional banking systems and digital assets/cryptocurrency projects as time progresses further into our present era– an era filled with uncertainty yet resilient nonetheless when it comes embracing new trends within various industries especially those involving finance related services & products ranging from conventional banking services all way up decentralized networks powered by blockchain technology .