The last few days have been nothing short of a roller coaster ride for the crypto community, especially for the users related to Silicon Valley Bank and the Stablecoin USDC. This was a result of the possible shutdown of the famous lender by the US authorities. All of this happened in less than two days.
A last effort is now being made to save the troubled bank and its stakeholders from going into big troubles with their finances.
After the initial investigation, the US authorities have now allowed the users of Silicon Valley Bank to access the funds they’ve deposited in the bank.
Jeremy Allaire, the co-founder of Circle (USDC’s parent company), tweeted on Monday to thank the US authorities for making USDC reserves accessible for SVB users. He further mentioned that the authorities are actively taking crucial steps to mitigate the risks arising from fractional banking.
By making the funds available for SVB users, the US authorities have made USDC reserves perfectly safe, at least for now.
Following this news, the funds of SVB users will be available on Monday, March 13, when the bank opens.
Why are the updates related to SVB so important for Circle and USDC? Well, around $3.3 billion of the total USDC reserves (around $40 billion) are locked away in Silicon Valley Bank. The failure of SVB started when a capital crisis happened.
A large number of depositors started withdrawing their funds from SVB simultaneously. Since SVB mostly focuses its lending on tech-related projects, its failure sent shockwaves throughout the crypto community as well.
On Sunday, March 12th, a joint announcement was made by the chairman of the federal deposit insurance corporation, the federal reserve chair, and the US treasury secretary. The statement included the announcement of a decisive action to strengthen the US economy and support the country’s citizens by restoring their faith in the banking system.
The statement came after the failure of SVB to ensure the protection of its depositors. The statement mentioned that SVB depositors would have full access to their funds starting March 13.
US authorities took this emergency step of making additional funding available to eligible financial institutions in a bid to help banks in meeting their depositors’ needs.
Circle’s Funds are also Safe
The bill offered by the US authorities means that Circle, which has a considerable amount of funds in SVB, won’t suffer from fund losses.
These steps are not exclusive to SVB but were also announced to help other financial institutions like Signature bank, which isn’t performing very well either.
To ensure a secure stablecoin future, the Payment Stablecoin Act is being pursued by Congress. Upon approval, the law will allow the storage of stablecoin funds in the form of cash and short-term treasury bills in the US central bank.