In the wake of the recent collapse of Signature Bank, a major US bank, Gemini, a cryptocurrency exchange, has come forward to assure its users that it has not been affected by the bank’s failure. In an official tweet on March 13, Gemini announced that it had no funds at Signature Bank and that its Gemini US Dollar (GUSD) stablecoin was not backed by any deposits at the bank.
Gemini is a full-reserve exchange and custodian, which means that it holds all customer funds and GUSD reserves 1:1 on Gemini and is available for withdrawal at any time. The exchange has taken proactive measures to prevent any impact on its customers due to banking partnerships and continues to actively monitor counterparty risk.
1/ It’s very sad to hear the news about Signature Bank. They have been incredible partners to Gemini and our industry for the better part of a decade.
We have zero customer funds and zero Gemini dollar (GUSD) funds held at Signature Bank.
— Gemini (@Gemini) March 13, 2023
Gemini’s tweet came after the collapse of Signature Bank, which was part of a series of bank failures that swept the US in early March. Silvergate Bank agreed to “voluntarily liquidate” on March 8, followed by Silicon Valley Bank being shut down on March 10. These bank failures have led to speculation about the stability of stablecoins, such as GUSD, which are supposed to maintain a stable value in relation to the US dollar.
In addition to reassuring its customers that its GUSD reserves are held at State Street Bank, Goldman Sachs, and Fidelity, Gemini also highlighted the recent loss of peg by Circle’s USD Coin (USDC) on March 13, due to fallout from the Silicon Valley Bank collapse. However, USDC regained its peg later in the day.
Gemini’s announcement underscores the importance of transparency and full-reserve backing for stablecoins, which have come under increased scrutiny from regulators in recent years. While the collapse of Signature Bank and other banks may have caused some turbulence in the cryptocurrency market, it appears that Gemini has taken steps to protect its customers and maintain the stability of its GUSD stablecoin.
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