The unsettling collapse of three banks in the US, including Signature Bank, Silicon Valley Bank (SVB) and Silvergate, within the space of one week has wreaked havoc on the global crypto market, wiping off over $70 billion as Bitcoin fell below $20,000 per unit on Friday.
On March 12, Bitcoin was hovering around $22,000, though it’s not exactly great news, if Peter Schiff, CEO of Euro Pacific Capital, is to be believed. Schiff predicted that the value of the world’s largest cryptocurrency could soon drop below $4,000.
Two crypto-friendly banks, Silvergate Capital and Signature Bank, folded last week, and billions of dollars belonging to crypto exchanges like Coinbase were caught up in the storm.
However, The Department of the Treasury, Federal Reserve System and Federal Deposit Insurance Corporation issued a joint statement indicating that the interests of Signature Bank and Silicon Valley Bank depositors would be protected.
Signature Bank had $88.59 billion in deposits as of December 31, 2022 and the New York Department of Financial Services has taken possession of the bank.
“As of close of business Friday March 10, Coinbase had an approximately $240m balance in corporate cash at Signature. As stated by the FDIC, we expect to fully recover these funds,” the popular crypto exchange tweeted.
Circle, the firm behind the USDC stablecoin, was also affected by Signature Bank’s collapse.
CEO Jeremy Allaire said in a tweet that “With the closure of Signature Bank, we will not be able to process minting and redemption through SigNet, we will be relying on settlements through BNY Mellon”.
“Additionally, we will be bringing on a new transaction banking partner with automated minting and redemption potentially as soon as tomorrow. We are committed to building robust and automated USDC settlement and reserve operations,” he added.
Crypto firm Circle had $3.3 billion and crypto lender BlockFi had $227 million stuck at SVB, the non-crypto bank that collapsed last week, causing panic in the tech industry.
The Fed’s interest rate hikes over the past year was blamed for triggering SVB’s failure, while FTX’s demise is supposed to be behind the Silvergate debacle.