Bermuda Post

Tuesday, Mar 28, 2023

Silicon Valley Bank Failure Rattles "Stable" Cryptocurrency USD Coin

Silicon Valley Bank Failure Rattles "Stable" Cryptocurrency USD Coin

Circle said late Friday it had been unable to withdraw its reserves from Silicon Valley Bank, whose sudden collapse rattled financial markets.
The supposedly "stable" cryptocurrency USDC fell sharply after the firm that created it, Circle, announced it holds $3.3 billion in failed Silicon Valley Bank (SVB) and has dropped its peg to the dollar.

Circle said late Friday it had been unable to withdraw its reserves from SVB, whose sudden collapse rattled financial markets.

The Federal Deposit Insurance Corporation on Friday took over SVB, a major lender to the tech world, in the second-largest bank failure in US history.

SVB is expected to reopen on Monday under a new name, with billions in customer deposits now under FDIC control.

The FDIC guarantees deposits -- but only up to $250,000 per client and per bank.

The agency said Friday it would provide certificates to customers with uninsured funds -- those above the $250,000 limit -- so that they would be the first to receive funds eventually recovered while the bank is in receivership.

But the process of liquidating the bank's assets can be long, with no certainty of just how much will be recovered.

The USD Coin, or USDC, was launched in 2018 as a "stablecoin," meaning it was indexed to a currency backed by a central bank, in this case the US dollar.

It is listed as the second largest "stable" currency worldwide, based on its volume in circulation (around $40 billion), behind Tether.

Stablecoins are supposed to be backed by equivalent reserves in immediately available assets, either cash or readily convertible financial securities.

Overnight Friday to Saturday, the USDC fell to its lowest level ever, dropping to 87 cents before recovering to around 94 cents.

Other stablecoins have also suffered.

The Dai, the fourth-largest stablecoin by volume in circulation, fell to 95 cents, while the Frax (sixth largest) fell to 94 cents, its lowest ever.

The Coinbase cryptocurrency exchange platform said it was suspending USDC-dollar conversions until Monday, given its exceptionally high activity.

More than $25 billion in USDC had been exchanged on the Coinbase platform in 24 hours, an enormous volume compared to overall holdings.

Meantime, Binance, the largest cryptocurrency transaction site, said it was suspending conversions of USDC into BUSD -- Binance USD, the platform's own "stable" currency.

"Like other customers and depositors who relied on SVB for banking services, Circle joins calls for continuity of this important bank in the US economy and will follow guidance provided by state and Federal regulators," Circle said in a statement.

Withdrawal orders from SVB reached a breathtaking $42 billion in a single day on Thursday, according to the California Department of Financial Protection and Innovation.

When the bank was unable to honor all those requests, the FDIC stepped in to take control.
Newsletter

Related Articles

Bermuda Post
Close
0:00
0:00
Brand new security footage has just been released to the public showing the Active shooter Audrey Elizabeth Hale drove to Covenant Church School in her Honda Fit this morning, parked, and shot her way into the building
Social Media censoring users for saying the true
Smart Iranian fashion designer teaching dummy TV anchors lesson about reality
AMERICA, 2023
U.S. charges FTX's Bankman-Fried with paying $40 million bribe
Fallen 'Crypto King' Who Owes Millions to Investors Was Kidnapped and Tortured
Regulators blame social media for SVB's rapid collapse: 'Complete game changer'
AOC explains why she opposes banning TikTok
UK: Humza Yousaf replaces Nicola Sturgeon as SNP leader and first minister in Scotland
In a dramatic U-turn against His Government: Judicial Reform Legislation Must Be Halted, Says Israeli Defense Minister Yoav Gallant
Gordon Moore, a co-founder of Intel Corporation, died at 94
Powell: Silicon Valley Bank was an 'outlier'
Donald Trump arrested – Twitter goes wild with doctored pictures
NYPD is setting up barricades outside Manhattan Criminal Court ahead of Trump arrest.
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Home Secretary Suella Braverman tours potential migrant housing in Rwanda as asylum deal remains mired in legal challenges
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
Credit Suisse to borrow $54 billion from Swiss central bank
Russian Hackers Preparing New Cyber Assault Against Ukraine
Jeremy Hunt insists his Budget will get young parents and over-50s back into work
If this was in Tehran, Moscow or Hong Kong
Nashville police officer, and a female driver shooting one another
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
Mexican President Claims Mexico is Safer than the U.S.
A brief banking situation report
Lady bites police officer and gets instantly reaction
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
'No relation to the American SVB': India's SVC Bank acts to calm depositors amid brand name confusion.
Good news: The U.S. government is now guaranteeing all deposits, held by, Silicon Valley Bank, and the funds are available as of today
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
BBC Director General, Tim Davie, has apologized, but not resigned, yet, following the disruption of sports programmes over the weekend
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Fitness scam
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
A primitive judge in Australia sparked outrage when he told a breastfeeding woman to leave his courtroom for being “a distraction"
Barcelona is feeling the heat as they face corruption charges over payments to former vice-president of Spain's referees' committee, Jose Maria Enriquez Negreira
Senator Tom Cotton: If the Mexican Government Won’t Stop Cartels from Killing Americans, Then U.S. Government Should
Banking regulators close SVB, the largest bank failure since the financial crisis
The unelected UK Prime Minister Rishi Sunak, an immigrant himself, defends new controversial crackdown on illegal migration
Old clip of Bill Gates saying Ukraine is a big, fat, corrupt sinkhole is going viral
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
How do stolen goods end up on Amazon, eBay and Facebook Marketplace?
It's the question on everyone's lips: could a four-day workweek be the future of employment?
Is Gold the Ultimate Safe Haven Asset in Times of Uncertainty?
×