USDC depegs to $0.89 as Sillicon Valley Bank Collapses — What Actually Happened?

USD Coin (USDC), the second-largest stablecoin in the cryptocurrency sector, experienced a drop in value below its dollar peg to a low of 81.5 cents on Saturday, 11th of March 2023 due to concerns over its issuer’s exposure to Silicon Valley Bank, which recently collapsed. USDC’s collapse other stables such as DAI and Pax Dollar to temporarily lose their peg to the U.S. dollar, both trading in the range of $0.94 to $0.98.

Let’s get to the bottom of this and understand who Sillion Valley Bank is, why it collapsed, and why its collapse affected the USDC peg.

Who is Sillicon Valley Bank?

Silicon Valley Bank (SVB) has been around as early as 1983 where it initially collected deposits from businesses financed through venture capital. It later expanded into banking and financing but it’s history is not without struggles. It kept providing venture capital to companies like Cisco Systems and Bay networks but it started experiencing financial difficulties throughout the mid 90’s but they kept on expanding despite this fact.

By 2011 SVB helped fund more than 30,000 startups and had offices in Bangalore, London Beijing and Israel. On top of this, they also received a $235 million investment from the U.S. Treasury through the…