USDC SVB Depeg (March 2023)

On March 10, 2023, Silicon Valley Bank (SVB) was shut down by regulators, causing panic in the stablecoin market. Circle, the issuer of USDC, had approximately $3.3 billion (about 8% of its reserves) deposited at SVB.

Key Timeline

March 10: SVB shut down by FDIC. Circle confirms USDC reserve exposure.

March 11: USDC drops to $0.878 as panic selling intensifies.

March 12: Federal government announces SVB depositors will be made whole.

March 13: USDC begins recovery, reaching $0.99+ within 24 hours.

Impact

USDC market cap dropped from ~$43B to ~$37B during the event

Contagion spread to DAI and FRAX which held USDC in reserves

Highlighted the "single point of failure" risk in fiat-backed stablecoins