The stablecoin fell to as low as $0.88, according to CoinGecko data, but returned to $1 on Monday. Circle announced it would allow automatic USDC redemption through a new banking relationship, with Cross River Bank.
Stablecoins are cryptocurrencies designed to maintain a
constant exchange rate with traditional currencies. USDC is the
second-biggest stablecoin with a market cap of $37.6 billion.
From Monday to Wednesday, Circle processed $3.8 billion of
USDC redemptions (investors swapping their tokens back into U.S.
dollars) and created $0.8 billion more of the token, Circle's
blog post said, meaning investors have pulled around $3 billion
overall in the three days.
The rapid outflows come after U.S. banking regulators issued
a fresh warning last month that crypto-related deposits in banks
could be subject to liquidity risks. The regulators highlighted
deposits linked to stablecoins as susceptible to volatility
during periods of market stress if there is a rapid influx of
redemption requests.
In the past week, investors have pulled a net $6 billion
from the coin, according to CoinGecko data.
"The events of the past week have impacted the liquidity
operations for USDC," Circle said.
"We will continue efforts to add additional transaction
banking partners."
(Reporting by Elizabeth Howcroft; Editing by Sharon Singleton)
