Financial technology company Circle believes the collapse of Silicon Valley Bank shows the need for its USDC stablecoin to be backed by the U.S. Federal Reserve with its U.S. dollars held at the Fed.
The Boston-based firm, which survived the collapse of Silicon Valley Bank (SVB) by shifting $3.3 billion of cash out of the struggling bank, told a Gillmore Centre for Financial Technology conference that it has long advocated for regulation that would make it a full reserve federally supervised institution.
At the conference held at Warwick Business School, Circle’s Tarleton Watkins said that one long term option for retail stablecoins could involve a wholesale central bank digital currency (CBDC) at the Fed as a backing instrument, but in the meantime holding dollar reserves with the Fed rather than various financial partners would be a logical step in light of SVB’s failure.
The Senior Policy Specialist said: “In some ways, the events surrounding SVB act as a vindication of what we have been advocating for and that is a full Fed reserve model, where we could have access to risk-free cash.