Sometimes a stablecoin is anything but. When Silicon Valley Bank collapsed in March of last year, crypto company Circle Internet Financial Ltd. had $3.3 billion of cash reserves backing its USD Coin parked in the bank and couldn’t get it out. Stablecoins are crypto tokens whose value is typically pegged to a currency such as the US dollar. They offer a way for traders to quickly move between more volatile coins and something approximating cash or a way to hold or send money without using a bank. They can track a normal currency in a variety of ways—chiefly by holding assets such as cash or government bonds to support the value of the coin.

With about 8% of USDC’s reserves stuck in a failing bank, the stablecoin experi­enced its own panic. Traders raced to get out, dragging its price well below $1 over the dramatic weekend when regulators were figuring out what to do about SVB. After the government stepped in to make all of the bank’s depositors whole, USDC’s price recovered. “Following last year’s banking crisis, Circle upgraded the market infrastructure behind USDC to be the strongest, safest, most transparent digital dollar on the internet today,” a Circle spokesperson says.