A fintech company with operations in Bermuda is among the beneficiaries of a move by the US government and American banking regulators to guarantee to cover all deposits in California’s Silicon Valley Bank.

SVB, which was popular with tech start-ups, was toppled late last week after a run by bank customers.

Boston-based Circle, whose subsidiary Circle International Bermuda Ltd is licensed by the Bermuda Monetary Authority, had a $3.3 billion USDC reserve deposit held at Silicon Valley Bank, the company reported on Friday.

USDCs are a form of cryptocurrency called stablecoins, which are designed to maintain a constant exchange rate with "fiat" currencies - those backed by a central government rather than a physical commodity such as gold - for example through a 1:1 US dollar peg. USDC is the second-biggest stablecoin with a market cap of $37 billion.

On Sunday, Circle said on its website: “Following the joint announcement by US Treasury Secretary Janet Yellen and US prudential regulators, all depositors with Silicon Valley Bank and Signature Bank, which was closed by regulators today, will be made whole.

“The $3.3 billion USDC reserve deposit held at Silicon Valley Bank, about eight per cent of the USDC total reserve, will be fully available when US banks open tomorrow [Monday] morning. No USDC cash reserves were held at Signature Bank. As a regulated payment token, USDC remains redeemable 1:1 with the US dollar.”

Circle added: “As part of our commitment to expanding banking partnerships, Circle is also announcing automated USDC minting and redemption for customers via new banking partners that go live this week.”

Jeremy Allaire, co-founder and CEO of Circle, said in the release: “Trust, safety and 1:1 redeemability of all USDC in circulation is of paramount importance to Circle, even in the face of bank contagion affecting crypto markets.

“We are heartened to see the US government and financial regulators take crucial steps to mitigate risks extending from the banking system. We’ve long advocated for full-reserve digital currency banking that insulates our base layer of internet money and payment systems from fractional reserve banking risk.”

On Friday, Circle said on Twitter that Silicon Valley Bank was one of six banking partners that Circle used for managing the approximately 25 per cent portion of USDC reserves that it held in cash.

Meanwhile, The Washington Post reported that another company with a Bermuda connection, BlockFi, had $227 million at Silicon Valley Bank.

The New Jersey-based crypto lender has filed Chapter 11 proceedings in its home state.

The company’s Bermudian subsidiary, BlockFi International Ltd, is in the midst of winding up proceedings in the Supreme Court of Bermuda. That matter is back before the court on June 9.