The collapse of three US crypto-friendly banks has sparked a backlash in the crypto community as some top players like Coinbase consider adding banking features to their services. One of the banks that fell into the death trap is Silicon Valley Bank after a run of so many that we can’t redeem customer withdrawal requests.
Then on March 12, Signature bank closed shop, compounding the problem. In the midst of the failure, Coinbase CEO Brian Armstrong tweeted which adds banking features before in the exchange’s agenda.
USDC Rebounds From Depeg Brief As Coinbase Considers A Bypass From Mainstream Banking
But, USDC has recovered from the shock impact, with the dollar peg climbing back to the original $1 mark. This is a comeback after Circle CEO Jeremy Allaire declare that USDC reserves are safe and Circle gets a new banking partner.
In addition, the new US Federal Reserve declare A $25 billion funding program to support banks like SVB that are battling liquidity problems could be responsible for the USDC’s recovery.
Due to the recent crisis, Coinbase CEO Brain Armstrong tweeted on March 13 in response to members of the crypto community. suggestion from neo-bank services. According to Armstrong, Coinbase previously considered adding features to compensate for the failures of the traditional banking system. He noted that, given the recent problems, non-fractional reserve banking would be preferable.
Meanwhile, Coinbase held around $240 million in Signature Bank. However, it hopes to recover funds from the problem bank.
Crypto Community Reacts To US Bank Implosions
The recent collapse of crypto-friendly banks, Silvergate, Signature, and Silicon Valley Bank, has fueled bearish sentiment in the public. Troubled banks are among the few that support cryptocurrency services.
At the collapse of Silicon Valley Bank (SVB), which serves a number of startups, including crypto companies, became evident after US authorities seized the bank on Friday, March 10. The regulatory action against SVB comes after the bank was unable to fulfill withdrawal requests as worried customers rushed to withdraw. that fund. All this led to rumors of SVB’s liquidity crisis and failure to raise new capital.
The collapse of Silicon Valley Bank represents the second largest financial failure of a retail bank, in the US, since 2008. Signature Bank, another crypto-friendly bank, suffered a similar demise. The incident prompted the New York Department of Financial Services to take over the bank to prevent it from operating again as customers withdrew their funds.
The ripple effect of the collapse of the banks has already begun to spread through the crypto industry, with some stablecoins dancing to a depressing tune. USDC felt the impact, with a 10% decline in price on March 12, shortly after the issuer, Circle, revealed that there are reserves stuck in SVB.
On March 9, Circle tried to withdraw funds from SVB as the bank was about to close its operations. But on March 11, stablecoin issuers confirmed which could not fully process the withdrawal of funds and still have $3.3 billion in USDC reserves locked in Silicon Valley Bank. Circle also has some undisclosed funds stuck in Silvergate.
Featured image from Pixabay and chart from Tradingview.com