Crypto investors should know this by now it doesn’t take long To topple the beleaguered multi-billion-dollar firm. On March 10, California regulators officially shut down Silicon Valley Bank (SVB), just 48 hours after the company disclosed it was in financial trouble. As Cointelegraph reported at the time, SVB is the first Federal Deposit Insurance Corporation (FDIC)-insured bank to fail in 2023. That key detail prompted federal regulators in the United States to pursue and backstop SVB depositors before a bank run. While the government protections weren’t enough to stop the massive slide in bank stocks, the market reopened on Monday, with bitcoin (B T c) and the broader crypto market soared. Did FDIC bails out bitcoin, only time will tell.
The SVB fiasco triggered a short but intense period of fear and panic in the crypto markets, as did Circle’s USD coin (usdc) Deprecated. The only thing Circle misplaced was a portion of its deposits in SVB when it collapsed.
This week’s Crypto Biz seeks to understand the SVB failure and how it affected crypto markets.
Silicon Valley Bank shut down by California regulator
California Department of Financial Protection and Innovation on March 10 shut down silicon valley bank and appointed the FDIC as receiver for the protection of insured deposits. news Triggered a fire sale in crypto and as SVB was a top-20 US bank by financial market total assets. So, what forced the regulators to shut down the bank? Earlier in the week, SVB released its mid-quarter financial update, disclosing a $1.8 billion loss related to the sale of securities and the need to raise $2.25 billion to expand operations. SVB was a trusted partner of many crypto-focused venture capital firms, but its demise was ultimately linked to period risk, not the risk of the crypto industry itself. washington svb fire extinguisher Announcing that all depositors, not just accounts up to $250,000, would be protected. President Joe Biden later confirmed save depositors The taxpayer will not have to spend anything.
Customers line up outside the Menlo Park, CA branch of Silicon Valley Bank. pic.twitter.com/SDNrSUC1C0
— Cointelegraph (@Cointelegraph) March 10, 2023
CEO Says Circle Able to Access $3.3B of USDC Reserves at Silicon Valley Bank
One of the companies caught in the SVB’s crosshairs was stablecoin issuer Circle, which had $3.3 billion in reserves at the failed bank. USDC lost stablecoin market share – and its peg to the US dollar – Once the SVB collapsed because it was not clear if and when the Circle could access its funds. At its lowest point, USDC fell to around $0.87. stablecoin since back to dollar equivalentcircle can confirm Access Reserve held in SVB, Circle lost significant market share last week due to the ongoing USDC redemptions. USDC currently has a market cap of $38.4 billion, less than half that of rival Tether, whose USDT value is around $73.6 billion.
BREAKING: Signature Bank shut down by New York regulators citing ‘systemic risks’
SVB wasn’t the only crypto-friendly bank to collapse this week. Located in Manhattan on March 12 Signature Bank was officially closed by the New York Department of Financial Services, allegedly to protect the US economy and strengthen public confidence in the banking system. A Treasury official reportedly said, “The actions we took today were designed to limit the consequences of depositor outflows from Silicon Valley and Signature and minimize any spillover effects.” Like SVB depositors, all account holders of Signature will be made whole without affecting taxpayers. Signature Bank had approximately $89 billion in deposits as of December 31, 2022.
@federal Reserve @U.S. Treasury @FDICgov Issue a statement on action to protect the American economy by ensuring depositors’ savings are safe, while strengthening public confidence in our banking system: https://t.co/YISeTdFPrO
– Federal Reserve (@federalreserve) March 12, 2023
South Korea launches ‘Metaverse Fund’ to accelerate domestic initiatives
The “metaverse” is still a vague and underdeveloped concept, but South Korea is taking it very seriously. Seoul’s Ministry of Science and ICT announced that it would allocate 24 billion won ($18.1 million) toward Metaverse development as part of a larger pot worth 40 billion won ($30.2 million). The newly launched Metaverse Fund is said to support mergers and acquisitions of various Metaverse-related companies – a move that could give the country an upper hand in the still-developing sector. The metaverse arms race is on. As Cointelegraph reported earlier this month, Mark Zuckerberg’s Meta Received court approval to proceed with its Metaverse acquisition plans.
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