BTC, USDC Soar After Government Promises to Rescue All Silicon Valley Bank Depositors
March 12, 2023 Bitcoin
The U.S. government’s biggest financial regulators released a joint statement on Sunday promising to save every last depositor at Silicon Valley Bank (SVB) – even those not fully covered by standard federal deposit insurance.
In response to the news, both Bitcoin and USDC are quickly returning to their price levels from before the bank’s collapse.
- The Federal Reserve, Treasury Department, and Federal Deposit Insurance Corporation jointly announced that every depositor would be able to access their money by Monday, March 13. Taxpayers will shoulder expenses as part of the resolution.
- Conversely, shareholders and “certain unsecured debtholders” will not be protected. Senior management has also been removed from their roles.
“This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” read the statement.
- A wide array of business leaders called on the government over the weekend to stem contagion from SVB’s failure, ranging from Bill Ackman to Mark Cuban. Stablecoin issuer Circle – which had $3.3 billion of its USDC reserves within the firm – called for similar action.
- Jeremy Allaire, CEO of Circle, has confirmed that all USDC reserves are now secure and that SVB’s former reserves will now be transferred to BNY Melon. “Liquidity operations for USDC will resume at banking open tomorrow morning,” he added.
- USDC now trades for $0.9943, almost back to its intended $1 peg price, after losing the peg on Friday when Circle revealed its exposure to SVB.
- Bitcoin also pumped in light of the news, now back above $22,000 for the first time since Thursday.
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