(The Herald Post) – Coinbase, the prominent cryptocurrency exchange, recently offered a $3 billion credit line to Circle, the crypto company behind USD Coin (USDC). This move aimed to restore USDC’s peg to the U.S. dollar after the stablecoin lost its footing due to Circle’s $3.3 billion exposure to Silicon Valley Bank, which was taken over by the Federal Deposit Insurance Corporation (FDIC).
Coinbase’s Emergency Credit Line Saves USDC
Reports indicate that Circle reached out for an emergency credit line to ensure USDC’s stability. Coinbase stepped up, providing a lifeline that covered the entire liquidity for USDC reserves, enabling the stablecoin to be converted back into U.S. dollars after the collapse of Silicon Valley Bank.
The de-pegging of USDC occurred when Circle was in the process of moving its deposits out of Silicon Valley Bank, just days before the regulatory authority ordered the bank to shut down. This event triggered widespread fear, uncertainty, and doubt (FUD) among investors, who quickly began withdrawing their funds from the stablecoin. Consequently, USDC’s price dropped below $0.90.
As of now, USDC has recovered and regained its $1 peg, boasting a market cap of $35 billion.
Coinbase Considers Offshore Expansion Amid U.S. Regulatory Pressure
On March 17, crypto.news reported that Coinbase is considering setting up an offshore unit due to mounting regulatory scrutiny in the U.S. The report suggests that global transactions would be routed through this new facility, although Coinbase has not officially confirmed these plans.
Coinbase COO, Emilie Choi, did, however, emphasize during an earnings call that “international expansion is going to continue to be a very core part of how we operate.” Choi expressed approval for recent regulatory developments in Europe and the U.K. and revealed that Coinbase plans to continue investing in those jurisdictions.
The crypto exchange recently commended the U.K. for initiating consultations on a new future financial services regulatory regime for crypto assets, which further underscores its commitment to investing in nations with supportive regulatory frameworks.
Coinbase’s quick action in providing a $3 billion credit line to Circle highlights the importance of collaboration within the crypto industry, particularly in times of crisis. As the industry continues to face regulatory challenges, it will be essential for companies to work together, adapt to evolving landscapes, and contribute to the growth and stability of the global cryptocurrency market.