• Silicon Valley Bank, SVB Financial Group, Altos Labs and Kanzhun Limited were among the top 10 depositors at the collapsed crypto-friendly Silicon Valley Bank in March.
• Circle reportedly held roughly $3.3 billion in deposits, while Sequoia had roughly $1 billion.
• The Federal Reserve announced that it would work with the FDIC to make both insured and uninsured depositors whole — up to a limit of $250,000 per depositor.
Major Depositors at Silicon Valley Bank
According to a June 23 report from Bloomberg, the Federal Deposit Insurance Corporation (FDIC) provided documents suggesting that Circle, Sequoia and others were covered for deposits in the billions of dollars. Other major depositors included Silicon Valley Bank itself, SVB Financial Group, biotechnology research firm Altos Labs and China-based firm Kanzhun Limited – behind a major online recruitment platform.
Insurance Coverage
The Federal Reserve announced following the SVB collapse that it would work with the FDIC to make both insured and uninsured depositors whole — in most situations, the FDIC only insures up to $250,000 per depositor. Circle reportedly held roughly $3.3 billion in deposits, while Sequoia had roughly $1 billion.
Exploring Raising Insurance Limit
The failure of SVB and the subsequent collapses of Signature Bank and First Republic Bank has put a spotlight on how regulators in the United States handle deposit insurance. Though the Fed, FDIC and Treasury Department said covering SVB and Signature deposits of more than $250,000 was part of a “systemic risk exception” they have reportedly explored raising this insurance limit.
USDC Price Impact
Following the failure of SVB in March and Circle confirming it had roughly $3.3 billion in exposure to the bank’s collapse its USD Coin (USDC) briefly depegged from U.S dollar which is stablecoin issuer announced it planned to launch a native version of USDC on the Arbitrum network as well as other networks like Ethereum mainnet or BSC mainnet but these efforts could not recover its price action from being affected by its exposure to Silicon Valley Bank collapse event earlier this year .
Conclusion
Overall It is evident that due to financial regulations are still very unclear when it comes related cryptocurrency banking operations which makes them vulnerable for such type events , so until those regulations are clearly defined such events can happen again anytime .