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USD Coin slumps after exposure to failed Silicon Valley Bank
Cryptocurrency firm Circle has confirmed that it has $3.3 billion of its USD Coin (USDC) reserves at Silicon Valley Bank, which collapsed on Friday in the largest US bank failure since the 2008 financial crisis. Circle assured investors that it would honour the peg despite the exposure to the failed bank. The coin, which broke its 1:1 dollar peg, fell as low as $0.87 on Saturday before recovering to around $0.98. Stablecoins like USDC are cryptocurrencies that are designed to maintain a constant exchange rate with fiat currencies like the US dollar. The collapse of Silicon Valley Bank has raised concerns about the stability of the cryptocurrency industry.
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TECHCRUNCH — What does the collapse of SVB mean for venture debt?
Garry Tan, CEO of Y Combinator, has warned that Silicon Valley Bank’s collapse has put 30% of the companies at the accelerator program at risk of not being able to make payroll. Tan has also written a petition to Janet Yellen, Martin J. Gruenberg, Sherrod Brown, and Patrick McHenry asking for relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank. The memo asks two things: that small-business depositors at SVB will be made whole through regulators conducting a backstop, and that Congress restores “stronger regulatory oversight and capital requirements for regional banks.” YC asks people to fill out a Google form if they would like to join them imploring the US government to take action.
China has been praised for its role in helping to broker a deal between Saudi Arabia and Iran to re-establish diplomatic relations and reopen their embassies within two months. Analysts suggest that this is evidence of China’s growing presence and increased interest in playing a role in the region. As the United States does not have good relations with Iran, China is seen to be “in a good position to broker an agreement” and is a “good-faith” and “reliable” mediator. There is an opportunity for increased and sustained dialogue between the two countries that could help bridge their vast geopolitical differences. While the now normalised relations between the two are not going to automatically solve their problems, better diplomatic linkages between Saudi Arabia and Iran will reduce the likelihood for regional conflict and will reduce regional tensions. This is a good thing for China, the US, and for regional actors as well.
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