Silicon Valley Bank (SVB) collapsed and was put into receivership by the FDIC late this week. SVB was the 16th largest bank in the United States. This means that the collapse is not only horrible for SVB but is perhaps more importantly a huge problem for its customers.
For instance, internet content provider Roku was impacted according the ABC News:
…’Internet TV provider Roku was among casualties of the bank collapse. It said in a regulatory filing Friday that about 26% of its cash — $487 million — was deposited at Silicon Valley Bank. …Roku said its deposits with SVB were largely uninsured and it didn’t know “to what extent” it would be able to recover them.’…(ABC News)
Of a potentially much larger concern is the contagion in banking and its connection to cryptocurrencies. Earlier in the week Silvergate bank collapsed. Silvergate was a darling of the crypto community. Starting in earnest with the collapse of Sam Bankman-Frieds’ cataclysmic destruction of FTX in late 2022, the cratering of the crypto market and confidence in it has proved to be valid.
#1: Horse To: All (#0)
Circles USDC Stablecoin Breaks Peg With $3.3 Billion Stuck at Silicon Valley Bank
A major cryptocurrency operated by Circle Internet Financial Ltd. meant to mimic the value of the U.S. dollar dropped sharply after the company said it had $3.3 billion tied up in the collapsed Silicon Valley Bank.
USD Coin fell below 87 cents on Saturday morning, according to data from CoinDesk. The virtual currency, known as a stablecoin, is designed to trade exactly at $1. It is backed by real U.S. dollars and short-term government debt, and sits at the heart of cryptocurrency trading.
Horse posted on 2023-03-11 15:15:05 Reply Private Reply
#2: Pinguinite To: Horse (#1)
I'm watching this, though the bigger picture is in the traditional finance world to see if SVB's failure might cascade into other traditional markets.
Yes, USDC & USDT, it's competitor, are largely used to facilitate crypto *trading* though trading is namely done by those treating crypto as assets to make dollars off of, not by those investing in crypto long term. Both are stablecoins backed by corporations that guarantee the $1 peg but that peg is only as good as the corporations that back them. And of course, both rely on the traditional dollar finance world to support them and that's the rug that was pulled out from under USDC (C stands for "Circle" which is the corp that issues USDC tokens).
This has sent crypto lower in dollar terms as traders are now gun shy, but now presents a buying opportunity for investors / hodlers of crypto.
Pinguinite posted on 2023-03-11 16:15:01 Reply Private Reply
#3: BTP Holdings To: Pinguinite (#2)
BTP Holdings posted on 2023-03-11 17:04:16 Reply Private Reply