Crypto firm Circle has revealed that its stablecoin USDC (“USD Coin”) has broken its dollar peg after announcing that it has $3.3 billion in exposure to Silicon Valley Bank (SVB), which recently failed. This news has sent shockwaves across the cryptocurrency market, as investors worry about the stability of USDC and other stablecoins.

USDC is a cryptocurrency that is pegged to the US dollar, meaning that each USDC should be worth one US dollar. However, the revelation that it has assets stuck in SVB has caused USDC to trade at a discount to the dollar, breaking its peg. This is a major concern for investors and traders, who rely on stablecoins to avoid volatility in the cryptocurrency market.

According to reports from CNBC and The Wall Street Journal, Circle holds about 5% of its cash in SVB, which is equivalent to $3.3 billion. This exposure came to light after SVB failed to meet its regulatory requirements, leading to the bank being placed under the control of the Federal Deposit Insurance Corporation (FDIC).

The news has also impacted other cryptocurrencies, with Bitcoin and Ethereum both experiencing significant price drops. This is because stablecoins are often used as a gateway into the cryptocurrency market, with investors and traders using them to move funds in and out of other cryptocurrencies.

Circle has said that it is working to address the situation, and that it remains committed to maintaining the stability of USDC. However, the news has raised questions about the reliability of stablecoins, and whether investors should be relying on them for safety in the cryptocurrency market.

As the situation develops, market analysts and investors will be closely watching to see how this impacts the broader cryptocurrency market, and whether other stablecoins are also at risk.