Silicon Valley Bank was a massive banking partner for much of the tech sector - and today, it stopped serving customer withdrawals.
This is big news: but let's go on-chain and have a look at the ramifications of this for the crypto ecosystem.
(Chart: USDC/USDT)
This is big news: but let's go on-chain and have a look at the ramifications of this for the crypto ecosystem.
(Chart: USDC/USDT)
Firstly:
Silicon Valley Bank was *a* banking partner of Circle.
Not their main banking partner, but Circle confirm in their Transparency Reports that they hold some funds at SVB.
The vast majority of their funds, of course - remain unaffected.
Silicon Valley Bank was *a* banking partner of Circle.
Not their main banking partner, but Circle confirm in their Transparency Reports that they hold some funds at SVB.
The vast majority of their funds, of course - remain unaffected.
Circle previously tweeted last week that they were able to withdraw all funds from Silvergate prior to the halting of withdrawals.
However, there is a lack of a similar tweet regarding SVB.
However, there is a lack of a similar tweet regarding SVB.
What does this mean for the rest of us?
Circle, of course, services USDC. The loss of some of their collateral does not mean that USDC goes to zero.
However, lack of knowledge of how much of their reserves are unavailable, is beginning to spur an on-chain bank run.
Circle, of course, services USDC. The loss of some of their collateral does not mean that USDC goes to zero.
However, lack of knowledge of how much of their reserves are unavailable, is beginning to spur an on-chain bank run.
The Curve 3pool, one of the most liquid on-chain pools of major stablecoins, is currently listing heavily towards USDC and DAI.
This means that it costs 1.0047 USDC currently to purchase 1 USDT.
This may not seem significant - but it means that over 90% of the pool is USDC/DAI.
This means that it costs 1.0047 USDC currently to purchase 1 USDT.
This may not seem significant - but it means that over 90% of the pool is USDC/DAI.
Due to Circle being US-regulated, USDC has often been seen as a premium asset by DeFi projects.
This has resulted in many large stablecoins such as DAI and FRAX taking a large amount of USDC as backing, which could result in some second-order effects.
This has resulted in many large stablecoins such as DAI and FRAX taking a large amount of USDC as backing, which could result in some second-order effects.
Over the past days, there have been a number of high-value burns of USDC from Coinbase wallets.
In the past hour - 2 transactions alone resulted in over $350M USDC burned and redeemed for fiat.
This also means that fiat withdrawals from Circle are currently processing as usual.
In the past hour - 2 transactions alone resulted in over $350M USDC burned and redeemed for fiat.
This also means that fiat withdrawals from Circle are currently processing as usual.
We cannot speculate on USDC's current capitalisation, but with over 80% of their assets held at BNY Mellon, it would likely be an overstatement to think that USDC is not going to be around tomorrow.
We can only await Circle's official updates for now.
We can only await Circle's official updates for now.
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