In recent days, the financial sector has been in a state of chaos, with Silicon Valley Bank (SVB) and its stakeholders being affected by the lender’s sudden closure. However, the US government and financial regulators have stepped in to ensure that individuals with assets deposited at SVB will have access to their funds.
Circle Co-founder and CEO Jeremy Allaire took to Twitter to announce that 100% of SVB’s deposits are safe and accessible when the bank opened on March 13.
Circle holds approximately $3.3 billion of its $40 billion USDC reserves at SVB, but the bailout means that the company will not suffer a loss of funds.
The US government’s emergency procedures were also extended to other financial institutions, including the defunct Signature Bank. joint press release from, and Federal Deposit Insurance Corp. Chairman Martin Gruenberg stated that after obtaining a recommendation from the FDIC and Federal Reserve boards, depositors will have full access to their funds beginning on March 13.
“To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors,” the press statement added.
In order to help banks, savings organizations, credit unions, and other qualifying depository institutions, the Federal Reserve Board announced the creation of a $25 billion Bank Term Funding Program (BTFP) that provides loans for terms of up to one year.
Circle’s USDC, the second-largest stablecoin, is regaining its $1 peg following Allaire’s assurance that its holdings are secure. Futures associated with the Dow Jones Industrial Average jumped more than 300 points in pre-market trading in response to the developments. According to data from crypto market tracker Coinmarketcap, cryptocurrency prices have also recovered, with Bitcoin up 10% in the last 24 hours.
Additionally, the Payment Stablecoin Act, which is still being actively pursued by Congress, would establish in law a system in which stablecoin money would be stored with cash at the US central bank and short-term Treasury bills. Allaire pointed out that the Act is needed now more than ever if we want a truly safe financial system.
The US government and financial regulators have taken emergency measures to contain the financial contagion caused by the failure of SVB. This move has ensured that Circle’s USDC reserves are safe and that depositors will have full access to their funds.
The creation of the $25 billion Bank Term Funding Program (BTFP) by the Federal Reserve Board will also provide loans for terms of up to one year to help qualifying depository institutions. The Payment Stablecoin Act is still being pursued by Congress and could establish a more secure system for storing stablecoin money.