"Coinbase Extends $3 Billion Emergency Credit Line to Circle Internet Financial After Bank Collapse Threatens Stability of USDC Stablecoin"

Coinbase offered a $3 billion emergency credit facility to Circle Internet Financial to guarantee the liquidity of its USDC stablecoin after the collapse of Silicon Valley Bank, which held $3.3 billion of Circle's reserve deposits, but the credit line was unnecessary after USD Coin regained its peg to USD.

Coinbase, a US-based cryptocurrency exchange, offered a $3 billion emergency credit facility to Circle Internet Financial to guarantee the liquidity of its USDC stablecoin, according to sources familiar with the matter. The credit line was offered after Silicon Valley Bank, which held $3.3 billion of Circle's reserve deposits that backed the stablecoin, collapsed. Circle had instructed the transfer of its funds out of the bank prior to its collapse, but the seizure of the bank by the Federal Deposit Insurance Deposit Corp (FDIC) prevented the transfer from being completed. As a result, USD Coin lost its peg to the US Dollar, causing investors to panic and withdraw their funds.

The collapse of Silicon Valley Bank left Circle with a $3.3 billion exposure to the bank, prompting Coinbase to extend the credit line to ensure sufficient liquidity for the stablecoin. USD Coin is a joint project of Coinbase and Circle, operating under a joint venture known as the CENTRE Consortium. However, after receiving clarity from the FDIC regarding the plan of action for the downed bank, USD Coin regained its peg to USD, rendering the multi-billion dollar credit facility unnecessary.