Silicon Valley Bank Fails, $USDC Depegged

Silicon Valley Bank Fails, $USDC Depegged

Silicon Valley Bank has been ordered closed by the California Department of Financial Protection and Innovation, making it the biggest US lender to fail in over a decade. California state watchdogs took possession of the bank and appointed the Federal Deposit Insurance Corporation (FDIC) as a receiver.

The FDIC said Silicon Valley Bank had approximately $209 billion in assets and $175.4 billion in deposits. To protect insured depositors, the FDIC established the Santa Clara Savings Insurance National Bank (DINB) and has transferred all of Silicon Valley Bank's deposits to the new bank. the FDIC said insured depositors will have access to their deposits on the morning of Monday, March 13, 2023.

Following the collapse of Silicon Valley Bank, Binance, Tether, Paxos, Bybit and several other crypto institutions have said they have no exposure to Silicon Valley Bank.

Circle, the issuer of the stablecoin $USDC, tweeted that Silicon Valley Bank is one of six banking partners Circle uses to manage about 25% of USDC reserves held in cash. While Circle awaits clarity on how the FDIC receivership of SVB will impact its depositors, Circle and $USDC continue to operate normally.

A few hours later, Circle tweeted that $3.3 billion of its about $40 billion of $USDC reserves remain at Silicon Valley Bank.

According to TokenInsight data, $USDC dropped about 9.58% in the last 24 hours and is now trading at $0.904327.

Crypto exchange Binance announced that it has temporarily suspended auto-conversion of $USDC to $BUSD due to the $USDC depegged situation. Another crypto exchange, Coinbase, said it will temporarily pause $USDC: $USD conversions over the weekend due to its dependence on USD transfers made by banks during normal business hours. When banks open on Monday, Coinbase plans to re-commence conversions.

 

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