Financial markets have been tumultuous. In particular, for USDC stablecoin and Silicon Valley Bank and its stakeholders, since the lender went from robust and profitable to shut down by regulators in less than 48 hours.
A lifebuoy was thrown to save the bank and others drowning. The U.S. government and financial regulators said Silicon Valley Bank depositors will get their money. Circle Co-founder and CEO Jeremy Allaire tweeted Monday morning that the Fed’s efforts to address “fractional” banking system vulnerabilities “heartened” the company.
Silicon Valley Bank opens today, March 13, with “100%” of deposits safe, according to Allaire. Circle disclosed late Friday that Silicon Valley Bank has $3.3 billion of its $40 billion USDC reserves. The tech-focused lender’s share price plunged after a panicky client run on deposits.
SVB’s collapse shook cryptocurrency and worldwide markets after a capital crisis caused the second-largest U.S. financial institution insolvency.
Allaire stated: “We are committed to establishing strong and automated USDC settlement and reserve processes with the highest quality and transparency.” On Sunday night, U.S. regulators announced emergency measures to curb the SVB contagion and a guarantee to protect depositors.
Yellen, Powell, and Gruenberg announced the news in a joint statement. “Today we are taking bold efforts to defend the U.S. economy by strengthening public confidence in our financial system,” the joint press release stated. After FDIC and Federal Reserve board approval, depositors will have full access to their funds on March 13.
“To support American businesses and consumers, the Federal Reserve Board on Sunday said it will make available additional money to qualifying depository institutions to help insure banks have the ability to satisfy all their depositors,” the press statement said.
.The rescue will return depositors to their original state, so Circle will not lose funds. Several financial institutions, notably the defunct Signature bank, were subject to U.S. emergency procedures.
Allaire said that Congress is still pursuing the Payment Stablecoin Act, which would legalize storing stablecoin money with cash at the U.S. central bank and short-term Treasury bills.
