Silicon Valley Bank: cryptocurrency loses value after collapse – 03/11/2023 – Market

Cryptocurrency USD Coin (USDC) lost its peg with the dollar and fell to an all-time low on Saturday after Circle, the company behind the digital currency, revealed exposure to Silicon Valley Bank.

Circle has $3.3 billion (R$17.2 billion) of its $40 billion (R$208.6 billion) in USDC reserves in Silicon Valley Bank, the company said in a tweet on Friday.

The coin lost its 1:1 peg with the dollar and dropped as low as 88 cents earlier on Saturday, before showing a slight recovery to 90 cents, according to market tracker CoinGecko.

Silicon Valley Bank collapsed after customers, concerned about the bank’s financial health, began withdrawing their deposits. The move stunned markets, leading to a loss of more than $100 billion in market value by US banks.

Circle said in a tweet on Friday that the company and USDC “continue to operate as normal” pending further clarity on what will happen to Silicon Valley Bank (SVB) customers.

Meanwhile, cryptocurrency exchange Coinbase also said in a tweet that it was not allowing USDC to be exchanged for USD over the weekend when banks are closed, citing “heightened activity”. The company plans to resume those businesses on Monday.

Circle did not immediately respond to a request for comment, sent outside of business hours, on the dollar peg.

Stablecoins are cryptocurrencies designed to maintain a constant exchange rate with fiat currencies — those backed by a central government rather than a physical commodity like gold.

Used in cryptocurrency trading, stablecoins have risen in value in recent years. USDC is the second largest stablecoin with a market cap of $37 billion. The largest, Tether, has a market cap of $72 billion, according to CoinGecko.

Also on Saturday, it was revealed that the US regulator that took over SVB had offered employees at the institution 45 days of employment at 1.5 times their normal salary, according to an email sent to workers and seen by the agency. Reuters.

Employees will receive benefit information over the weekend from regulator FDIC (Federal Deposit Insurance Corporation), and health plan details will be provided by former parent company SVB Financial Group, according to Friday’s email. .

SVB had 8,528 employees at the end of last year. The regulator has asked them to continue working remotely, with some exceptions, including essential workers. The FDIC did not immediately respond to a request for comment.