Circle says outstanding USDC transactions won’t process until Monday

USDC transactions through Signature Bank's Signet network won't process until Monday, according to a note sent by Circle to trading firms.

Circle, which founded USDC in 2018 with Coinbase, revealed Friday that $3.3 billion of its reserves behind its flagship stablecoin were stuck with the failed Silicon Valley Bank. The news triggered a sharp decline in USDC, which is meant to stay pegged one-to-one to the U.S. dollar. 

The note confirms transactions on Signet—which traders used to move funds over the weekend— “will be processed on Monday when banking resumes during normal working hours.”

The Signet system, designed to enable real-time payments for commercial clients, is active but is “reaching a capacity threshold which is causing the temporary delay,” according to the note sent by Circle and reviewed by The Block. 

Circle didn't immediately respond to a request for comment.

The delay may explain why the premiums witnessed on exchanges like Coinbase following the flight from USDC are not being arbitraged away as their order books merge USD with USDC.

USDC lost its peg to the U.S. dollar overnight, dropping as low as $0.88 following the collapse of Silicon Valley Bank. The crypto market was frustrated with Circle over a lack of transparency surrounding its exposure to the bank, which it eventually confirmed as being $3.3 billion.

Signature is one of the few remaining U.S. crypto-friendly banks after Silvergate Bank voluntarily liquidated and wound down operations on Wednesday.