Company: CRCL
Filing Date: 2025-02-13
Form Type: DRS/A
Source: 0000950123-25-001965
Chunk: 133

Company: Circle Internet Group, Inc.
Filing Date: 2025-02-13
Form: DRS/A
Chunk 133
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 secondary market price of USDC fell below $1. On Monday, March 13, 2023, the FDIC formally announced that it would guarantee all deposits held at SVB, and USDC soon regained its $1 secondary market trading price.
When the banking system reopened, we began processing the weekend’s queued redemptions, although due to the backlog and the failure of some of the banks that were part of the Circle stablecoin ecosystem, redemptions for some customers were
slowed. Although we did not incur any direct financial loss in connection with the SVB failure and we honored one-for-one redeemability of USDC by Circle Mint customers at all times, we believe the SVB failure was a contributing factor to the
subsequent decline in USDC in circulation. Since the SVB failure, we have continued to invest in and refine our reserve management structures, including by strengthening our governance around reserve management (see “Business—Reserve
management standard”), improving analysis and monitoring of counterparties (considering factors such as customer concentration, asset liability management, capital structure, profitability, and externalities), implementing end-of-day sweeps to
manage counterparty risk at settlement banks, and holding the significant majority of cash reserves at GSIBs.

While our view is that in the long-term, USDC in
circulation will be driven by secular growth in the adoption of the internet financial system, as well as our introduction of new products within the Circle stablecoin network, in the short term we believe isolated events or temporary trends can
have meaningful impact on USDC minting and redemptions. For example, we believe that the regional banking crisis in the United States in March 2023—and most notably the SVB failure discussed above—spurred outsized redemptions in the weeks
following a brief price dislocation of USDC in certain secondary markets. Similarly, following the collapse of several digital asset lenders (e.g., Celsius, Voyager) in mid-2022, we believe the subsequent
rapid decline of decentralized finance lending market activity (which was a notable industry use case for USDC at the time) resulted in significant redemptions due to the reduction in need for USDC deployment to such protocols. Finally, particularly
in times of uncertainty for the stablecoin and digital assets industries, we believe that our uniquely robust connectivity with traditional banks has resulted in USDC serving as an off-ramp (i.e., channel into
fiat currency) from certain digital asset enterprises that lack meaningful banking coverage,