USDC, the second largest stablecoin, has lost its peg and is currently trading at 90.6 cents on the dollar. It follows the disclosure from Issuer Circle that $3.3 billion of USDC’s reserve assets were held at Silicon Valley Bank (SVB). The California regulator on Friday placed the bank under the control of the Federal Deposit Insurance Corporation (FDIC) following attempts on Thursday by SVB clients to withdraw $42 billion, or about a quarter of deposits. from the bank.

It appears that Circle was one of the customers who attempted a withdrawal on Thursday that did not go through. The price of the stablecoin has recovered from a low of 87.6 cents three hours ago.

Circle keeps about 25% of its cash reserves at six banks, with the rest mainly in a money-market fund as it owns Treasuries and is managed by Blackrock.

Coinbase, which uses USDC as its main stablecoin, said it would temporarily pause USDC-to-fiat conversions over the weekend while banks are closed. It says it plans to restart the conversions during the bank’s opening hours on Monday.

FDIC insurance only covers deposits up to $250,000. Since most of SVB’s clients are Silicon Valley start-ups and companies, many deposits have large balances and are not covered by insurance.

The big question is whether there will be a federal bailout. Silicon Valley Bank, with $209 billion in assets, is the second largest bank failure in United States history. On Friday, US Treasury Secretary Janet Yellen called a meeting with the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency (OCC).

Without a bailout, Circle’s other options are to raise additional capital or mint a token to compensate USDC holders for the shortfall. There is a precedent for minting tokens as compensation in the cryptocurrency world, but Circle is conservative and could be disapproved by regulators. In terms of raising capital, it joins the tail of many other start-ups with large deposits in SVB. Circle’s existing backers include Blackrock, Fidelity and Bloomberg’s philanthropic arm.

There is some irony in the world of stablecoins. Some consider the largest stablecoin, Tether, to be risky. But in February, the conservative issuer of the stablecoin Paxos was instructed to stop issuing Binance’s USD stablecoin. And now another conservative stablecoin issuer, Circle, is facing a crisis.