Crypto exchange Coinbase reportedly offered a $3 billion credit line to Circle, the crypto company that issues the USD Coin (USDC) stablecoin, in an effort to bring the stablecoin back to its $1 peg.
The latest development comes after USDC lost its peg to the U.S. dollar due to Circle’s $3.3 billion exposure to Silicon Valley Bank, which was taken over by the federal deposit insurance corporation (FDIC).
Coinbase allegedly offered a $3bn safety net
According to reports, Circle requested an emergency credit line to ensure the stability of USDC, and Coinbase provided the credit line that would have covered the entire liquidity for USDC reserves and allowed the stablecoin to be converted to U.S. dollars after Silicon Valley Bank’s failure.
The de-pegging event occurred after Circle had planned to move its deposits out of Silicon Valley Bank just days before the regulatory authority ordered the bank to close its doors.
It prompted a lot of fear, uncertainty, and doubt (FUD) among investors, who rushed to withdraw their funds from the stablecoin, causing it to de-peg from the U.S. dollar and trade at a price lower than $0.90.
As of now, the price of USDC is back to its $1 peg with a market cap of $35 billion.
Coinbase plans offshore unit amid U.S. regulatory scrutiny
On March 17, crypto.news reported that Coinbase might set up an offshore unit due to the increasing regulatory scrutiny of the industry in the U.S. The report suggests that global transactions would be routed through the new facility, and Coinbase has not confirmed the report yet.
While Coinbase has not yet confirmed the report, the company’s COO, Emilie Choi, did mention 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 exchange recently praised the U.K. for launching consultations on a new future financial services regulatory regime for crypto assets, indicating its continued investment in those jurisdictions.