Impact of Silicon Valley Bank and Silvergate bank failures to the crypto market

[zasad@]

March 2, 2023 USDC Reserve Report
https://www.circle.com/hubfs/USDCAttestationReports/2023%20USDC_Circle%20Examination%20Report%20January%202023.pdf

Amounts are shown here at their fair value as of the Report Dates. The Circle Reserve Fund in which these
securities are owned, reports U.S. Treasury Securities in accordance with Rule 2a-7 under the Investment
Company Act of 1940, as amended.
2. Cash held at U.S. regulated financial institutions: Bank of New York Mellon, Citizens Trust Bank, Customers Bank,
New York Community Bank, a division of Flagstar Bank, N.A., Signature Bank(closed 12 march), Silicon Valley Bank(bankrupt) and Silvergate(bankrupt)
Bank.
3. Fund and bank balances have been adjusted for timing and settlement differences, which include:
deposits/withdrawals occurring after the bank statement cut-off time (but before the Report Dates), securities
purchased/sold on the last day of the reporting period and settled after the Report Dates, interest receivable or
payable, and unrealized gains/losses.

https://www.coindesk.com/markets/2023/03/10/scrutiny-falls-on-43b-usdc-stablecoins-cash-reserves-at-failed-silicon-valley-bank/
"Circle’s USDC, the second-largest stablecoin, with $43 billion market capitalization, held an undisclosed part of its $9.8 billion cash reserves at failed Silicon Valley Bank.

According to Circle’s January reserve report, the firm held some $9.88 billion of cash deposited at regulated banks to back USDC’s value. According to Circle's website on March 10, cash deposits in the reserves amounted to $11.1 billion.

The full list of banks that held cash for Circle’s USDC are:
Bank of New York Mellon
Citizens Trust Bank
Customers Bank
New York Community Bank (a division of Flagstar Bank, N.A.)
Signature Bank
Silicon Valley Bank
Silvergate Bank.
Circle also keeps some part of USDC reserves in a dedicated BlackRock fund."


https://techcrunch.com/2023/03/10/uncertainty-stands-around-multi-billion-usdc-empire-as-issuer-circle-held-reserves-at-silicon-valley-bank/
"Update: After publication and our first update to include Circle’s initial statement regarding USDC’s reserves, the company announced that “3.3 billion of the ~$40 billion of USDC reserves remain at SVB,” or a hair more than a third of the cash the company had previously detailed it held in January. In the wake of the news, USDC depegged from its $1 target, and is currently trading at around 92 cents on the dollar. About half an hour after Circle’s tweet last evening, Coinbase said that it was “temporarily pausing USDC:USD conversions over the weekend while banks are closed,” adding that it planned to “recommence conversions” when banks opened on Monday."

https://twitter.com/lookonchain/status/1634553237155217409
"How will Funds respond to the $USDC depegging?
Panic selling $USDC or buying $USDC at the bottom?"



https://cointelegraph.com/news/maker-dao-files-emergency-proposal-addressing-3-1b-usdc-exposure
MakerDAO files emergency proposal addressing 3.1B USDC exposure
“Proposal(s) implementing the above changes are expected to be posted in the next ~12 hours or less,” says MakerDAO.

Closed Board Meeting on March 13, 2023
https://www.federalreserve.gov/aboutthefed/boardmeetings/20230313closed.htm


___
https://www.circle.com/blog/an-update-on-usdc-and-silicon-valley-bank
"As a regulated payment token, USDC will remain redeemable 1 for 1 with the U.S. Dollar."


__
Breaking: Signature Bank closed by New York regulators, citing 'systemic risk'
https://cointelegraph.com/news/signature-bank-closed-by-new-york-banking-authorities?

Western Alliance and First Republic clobbered as regional bank jitters persist despite Fed backstops
https://www.morningstar.com/news/marketwatch/20230313595/western-alliance-and-first-republic-clobbered-as-regional-bank-jitters-persist-despite-fed-backstops

[zasad@]

https://finance.yahoo.com/news/circle-calls-on-congress-to-urgently-pass-stablecoin-legislation-amid-svb-crisis-171339369.html
Circle calls on Congress to urgently pass stablecoin legislation amid SVB crisis
"I've been uploading dollars to the internet since 2019, and since 2019 there was this ongoing persistent conversation about risk and we've been met with complete inaction," Circle's chief strategy officer and head of global policy Dante Disparte told Yahoo Finance in an interview.


https://www.circle.com/blog/march-14-2023-update-on-usdc-operations
"Moreover, as part of our ongoing initiatives to strengthen the USDC reserve, we now hold the cash portion of the reserve at BNY Mellon, except for limited funds held at transaction banking partners in support of USDC minting and redemption. "

[safar1980]

Silicon Valley Bank CEO Greg Becker sold nearly $30 million of stock over the past two years.
His sales, as well as those of other executives, are raising new questions over insider stock trading.
Altogether, SVB executives and directors cashed out of $84 million worth of stock over the past two years, according to Smart Insider.
https://www.cnbc.com/2023/03/14/svb-execs-sold-84-million-of-the-banks-stock-over-the-past-2-years.html

[zasad@]

https://nypost.com/2023/03/13/silicon-valley-bank-execs-worked-at-lehman-brothers-deutsche-bank/
Top Silicon Valley Bank execs worked at notoriously troubled Lehman Brothers, Deutsche Bank
"The employment records of SVB’s Kim Olson and SVB Securities executive Joseph Gentile raised eyebrows on social media after the tech lender’s rapid meltdown prompted fears of a systemic economic crisis. The feds were forced to bail out SVB on Sunday to restore public confidence in the banking sector.

Gentile serves as chief administrative officer of SVB Securities, a standalone investment bank wholly owned by parent company SVB Financial. But prior to taking that role in 2007, Gentile had a short stint as the chief financial officer for the fixed income division of Lehman Brothers’ Global Investment Bank." 

[yhiaali3]

As I heard, the Treasury Department and the US Federal Reserve announced the launch of an emergency program to compensate all bankrupt SVB and Signature Bank depositors.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm

I do not know if the affected depositors have been compensated, but this will help mitigate the effects of the crisis a little.

The fear was that the crisis would spill over into other banks, according to Ed Moya, chief market analyst at Oanda.

"Everyone on Wall Street knew that the Fed's rate hike campaign would eventually break something, and now it's breaking small banks,".

This proves the failure of this economic policy because it temporarily solves a problem in order to create a new, larger problem.

[zasad@]

As I heard, the Treasury Department and the US Federal Reserve announced the launch of an emergency program to compensate all bankrupt SVB and Signature Bank depositors.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm

I do not know if the affected depositors have been compensated, but this will help mitigate the effects of the crisis a little.

The fear was that the crisis would spill over into other banks, according to Ed Moya, chief market analyst at Oanda.

"Everyone on Wall Street knew that the Fed's rate hike campaign would eventually break something, and now it's breaking small banks,".

This proves the failure of this economic policy because it temporarily solves a problem in order to create a new, larger problem.

Silicon Valley Bank was not a small bank. This is the largest bank in America. They try to put out the fire with money, but in the end they will have to start printing money again. The safest investment is to buy US Treasuries, but printing new money will increase inflation and reduce the attractiveness of investing in US Treasuries.

[yhiaali3]

Silicon Valley Bank was not a small bank. This is the largest bank in America. They try to put out the fire with money, but in the end they will have to start printing money again. The safest investment is to buy US Treasuries, but printing new money will increase inflation and reduce the attractiveness of investing in US Treasuries.

True, SVB was among the 20 largest US commercial banks, even being described as the biggest bank to fail since the collapse of Washington Mutual in 2008.

Anyway, Ed Moya's words in the quote I put are not talking about SVB Bank as a small bank, but rather he warns of the collapse of smaller banks that are linked to technology and cryptocurrencies, here is the full quote:

But smaller banks that are disproportionately tied to cash-strapped industries like tech and crypto may be in for a rough ride, according to Ed Moya, senior market analyst at Oanda.
"Everyone on Wall Street knew that the Fed's rate-hiking campaign would eventually break something, and right now that is taking down small banks," Moya said.

Source: https://edition.cnn.com/2023/03/10/investing/svb-bank/index.html

[zasad@]

Silicon Valley Bank was not a small bank. This is the largest bank in America. They try to put out the fire with money, but in the end they will have to start printing money again. The safest investment is to buy US Treasuries, but printing new money will increase inflation and reduce the attractiveness of investing in US Treasuries.

True, SVB was among the 20 largest US commercial banks, even being described as the biggest bank to fail since the collapse of Washington Mutual in 2008.

Anyway, Ed Moya's words in the quote I put are not talking about SVB Bank as a small bank, but rather he warns of the collapse of smaller banks that are linked to technology and cryptocurrencies, here is the full quote:

But smaller banks that are disproportionately tied to cash-strapped industries like tech and crypto may be in for a rough ride, according to Ed Moya, senior market analyst at Oanda.
"Everyone on Wall Street knew that the Fed's rate-hiking campaign would eventually break something, and right now that is taking down small banks," Moya said.

Source: https://edition.cnn.com/2023/03/10/investing/svb-bank/index.html

https://www.bloomberg.com/news/articles/2023-03-19/new-york-community-bancorp-said-to-pursue-deal-for-signature
Signature’s Deposits, Loans Assumed by NY Community Bancorp
Bank assumes $38 billion in assets, $36 billion in liabilities
The FDIC gets an equity kicker that could reach $300 million

Many US banks have liquidity problems. If a small bank fails, a large bank will buy it out. But rumor has it that the SEC will need to pour $2-4 trillion into the banks to put out this fire for a while. And then on we will see the new tothemoon in the markets.

Then only keonspirological theories. If the US banks are busted, the situation will be even worse in the rest of the world, because they depend on the dollar. The regulator will say that the banking system is inefficient, banks need additional control, so welcome to the new WORLD - WORLD of CBDC.

[FP91G]

Market observers are on alert to find out just how much extra funding the Federal Reserve’s new bank backstop program will ultimately add into the system, with analysts at JPMorgan Chase & Co. positing that it could inject anywhere up to $2 trillion in liquidity.

That’s their maximum estimate. The analysts’ prediction based on the amount of uninsured deposits at six US banks that have the highest ratio of uninsured deposits over total deposits is closer to $460 billion. That’s a smaller amount, but still enormous compared to historic usage of the so-called discount window, another Fed facility that is often seen to carry a stigma and has historically involved banks taking a haircut on the amount borrowed relative to collateral.
https://www.bloomberg.com/news/articles/2023-03-16/jpmorgan-says-fed-s-loans-will-provide-2-trillion-of-liquidity

[zasad@]

https://www.bnnbloomberg.ca/us-studies-ways-to-guarantee-all-bank-deposits-if-crisis-expands-1.1898197
‘Dangerous Precedent’

The Mid-Size Bank Coalition of America, which includes banks with assets of as much as $100 billion, urged regulators to lift the current cap on deposit insurance, according to a March 17 letter seen by Bloomberg. The organization expressed concern that, if another regional lender fails, more depositors will move their money to the nation’s largest banks, regardless of the underlying health of their smaller competitors.

While some lawmakers, including Republicans, have said they are weighing changes to the current $250,000 FDIC insurance cap, a number of House conservatives have come out against a 100% guarantee.

“Any universal guarantee on all bank deposits, whether implicit or explicit, enshrines a dangerous precedent that simply encourages future irresponsible behavior to be paid for by those not involved who followed the rules,” the House Freedom Caucus said in a statement.

___
A lot of cryptocurrency projects have lost the ability to interact with the fiat system due to bank failures. Is this an accident or a signal from regulators to other banks? I don't believe in coincidences.

[dansus021]

USDC is settled right now, right?

CZ is recently tweet about Stable coin and said

"#BUSD, the most fiat-backed stablecoin, audited by big audit firms, regulated by the NYDFS, was forced to wind down (no new minting).

USDC is shrinking in market cap too due to bank closures.

USDT is growing." - https://twitter.com/cz_binance/status/1638111968027373568

and I also hear about Credit Suisse also has problem - https://edition.cnn.com/2023/03/19/business/credit-suisse-ubs-rescue/index.html

Many Bank collapsed and the economy still at recovery is just like put salt on fresh wound 

Bitcoin was created because of the 2008 economic crisis do u guys think crypto will push adoption ??

[zasad@]

USDC is settled right now, right?

CZ is recently tweet about Stable coin and said

"#BUSD, the most fiat-backed stablecoin, audited by big audit firms, regulated by the NYDFS, was forced to wind down (no new minting).

USDC is shrinking in market cap too due to bank closures.

USDT is growing." - https://twitter.com/cz_binance/status/1638111968027373568

and I also hear about Credit Suisse also has problem - https://edition.cnn.com/2023/03/19/business/credit-suisse-ubs-rescue/index.html

Many Bank collapsed and the economy still at recovery is just like put salt on fresh wound 

Bitcoin was created because of the 2008 economic crisis do u guys think crypto will push adoption ??

Cryptocurrencies cannot work without banks. And most of the big banks have been bankrupt for a long time, because they have a lot of useless assets on their balance sheets. These assets have a certain value only in theory, but in practice, if liquidity is not injected into the dunks, they will go bankrupt. Most cryptocurrencies were printed with a few keystrokes on a computer and the capitalization of the crypto market is small, and real money in this ecosystem is 10 times less.

[safar1980]

The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023.  Customers of Silicon Valley Bridge Bank, National Association, should continue to use their current branch until they receive notice from First–Citizens Bank & Trust Company that systems conversions have been completed to allow full–service banking at all of its other branch locations.

Depositors of Silicon Valley Bridge Bank, National Association, will automatically become depositors of First–Citizens Bank & Trust Company. All deposits assumed by First–Citizens Bank & Trust Company will continue to be insured by the FDIC up to the insurance limit.
fdic.gov