HomeBreaking NewsBitcoin, USDC stablecoin rally after US intervenes in SVB

Bitcoin, USDC stablecoin rally after US intervenes in SVB

SINGAPORE, March 13 (Reuters) – Bitcoin and other cryptocurrencies rose on Monday after U.S. authorities announced plans to limit the fallout from the collapse of Silicon Valley Bank (SVB) and as cryptocurrency firm Circle assured investors that its peg it was safe.

The United States Treasury and the Federal Reserve Announced a series of measures to stabilize the banking system and such depositors in SVB (SIVB.O) would have access to their deposits on Monday.

The moves came as authorities took possession of New York-based Signature Bank. (SBNY.O)the second bank failure in a matter of days.

Stablecoin USD Coin (USDC), which had lost its 1:1 peg to the dollar and hit a record low on Saturday amid concerns about exposures by Circle, the firm behind USDC, to Silicon Valley Bank, rallied. It was at $0.9917, closer to par and above last week’s lows around $0.88.

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Circle CEO Jeremy Allaire said in a cheep its $3.3 billion USDC reserve deposit being held at the collapsed Silicon Valley Bank (SIVB.O) it will be fully available when US banks open on Monday.

“Circle’s USDC operations will be open for business, including with a new automated settlement through our new partnership with Cross River Bank,” Allaire said.

Bitcoin is up 8% from Sunday’s lows, trading at $22,568.

US officials said depositors at Signature Bank of New York (SBNY.O)which was closed Sunday by the New York state financial regulator, would also be recovered at no loss to the taxpayer.

Signature, like SVB, had a concentrated clientele in the technology sector, and values ​​on its balance sheet had eroded as interest rates rose. As of September, almost a quarter of Signature’s deposits came from the cryptocurrency sector, but the bank announced in December that it would reduce its cryptocurrency-related deposits by $8 billion.

Most analysts, however, cautioned against assuming all is well with market sentiment after these moves.

“Markets remain unsettled by the SVB bankruptcy,” said Alvin Tan, head of currency strategy at RBC Capital Markets in Singapore.

“Market turmoil triggered by SVB has upset rising market expectations for the path of Fed rates. Things are evolving, but it looks like volatility will remain high over the next few days.”

Meanwhile, the Bitstamp crypto exchange said it would continue to operate as normal, despite the failure of Signature Bank.

Major exchange Binance said it would convert the remainder of a $1 billion industry recovery initiative fund from its BUSD stablecoin to native cryptocurrencies such as bitcoin, ether and Binance Coin, its CEO Changpeng Zhao said in a tweet Monday. , citing recent changes in stablecoins and the banking industry

Binance launched the Industry Recovery Initiative (IRI) in November to help crypto projects facing a liquidity crisis following the collapse of rival FTX.

Additional reporting by Shubham Kalia and Baranjot Kaur in Bangalore Editing by Kim Coghill and Jacqueline Wong

Our standards: The Thomson Reuters Trust Principles.

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