Circle’s stablecoin, USDC, is facing a challenging period as it struggles to regain confidence from investors. The latest blow came when $723.5 million worth of USDC was redeemed and sent to a null address to be burnt, marking the largest redemption on record.
As per the reports, it has been stated that a sum of more than $6.2 billion has been redeemed since Friday. Additionally, around $1.66 billion has been minted, which has resulted in net redemptions of just over $4.5 billion.
Furthermore, the panic surrounding the reserves supporting the US regional banks has led to increased redemptions. This resulted in consecutive days of redemptions on Thursday and Friday, prompting US regulators to intervene and halt transactions involving the stablecoin over the weekend.
Despite the United States government’s assurance of a full return for the Silicon Valley Bank (SVB) that collapsed on Friday morning, causing a downturn in the cryptocurrency market, users of the USDC stablecoin remain skeptical about the current state of the USDC ecosystem.
One expert in the cryptocurrency industry, Zhang, has raised concerns about the stability of the USDC stablecoin. He noted that Circle, the company behind USDC, holds its cash reserves with several other banks. If any of those banks were to experience a bank run, similar to what happened with the Silicon Valley Bank, it could potentially lead to USDC de-pegging once again. Zhang also questioned whether the rewards currently offered by the cryptocurrency market are worth the risks associated with holding USDC stablecoins.
