Stablecoin Design Choices That Survive a Bank Run

Fiat-backed, overcollateralized crypto, and delta-neutral stablecoins face different bank-run paths. What “1:1” actually guarantees under stress. On the evening of March 10, 2023, Circle disclosed that $3.3 billion of the roughly $40 billion in reserves backing USDC remained at Silicon Valley Bank after the bank had been closed by regulators. Within hours, USDC traded as low as about $0.87 on secondary markets. Coinbase and other platforms paused conversions over the weekend while banks were closed. The peg recovered once U.S. authorities guaranteed SVB deposits and Circle resumed redemptions on Monday, March 13.