Developments in financial industry

Mar 20, 2023 - 7 min read

What happened?

On March 15th, 2023, the voluntary closure of Silvergate in the USA led to a series of further serious problems in the American banking market. Shortly after the Silicon Valley Bank (SVB) collapsed and was taken over by the Federal Deposit Insurance Corporation (FDIC), the crypto bank Signature was also seized by the New York State Department of Financial Services (NYDFS). 

These events not only triggered fear and contagion effects among banks providing institutional services, but also spilled over into the broader financial system with clients of major retail/deposit banks initiating bank runs. 

Then, on Saturday morning Swiss time, USDC stablecoin issuer Circle announced its 3.3 billion reserves (about 8% of its total assets) with Silicon Valley Bank (SVB). This announcement led to investors looking to convert Circle's USDC-issued stablecoin into US Dollars on a large scale. As a result, the token lost its peg to the US Dollar. Meanwhile, several other stablecoins came under pressure due to lower liquidity in the market. This was mainly due to restricted weekend banking hours and the corresponding lack of refinancing options for stablecoin issuers. 

This led to a halt in USDC redemptions on major crypto exchanges over the weekend. However, after regulators then assured that SRP investors would be compensated, trading resumed on Monday. Like other major market participants, we had also decided to temporarily pause direct trading of USDC against fiat currencies over the weekend, while continuing to maintain trading against crypto assets and other stablecoins, such as LUSD, DAI, USDT. These measures we had taken - as well as our carefully selected trading venues and market partners - were aimed at protecting our clients' assets in a highly volatile market environment and during the restricted weekend banking hours. 

What does this mean for Bitcoin Suisse?

Bitcoin Suisse has no direct exposure to either Silicon Valley Bank, Signature and Silvergate, or any other US-based bank. We are working with a group of banking partners domiciled in Switzerland and Liechtenstein for fiat payments and settlements. Our banking partners confirmed their ability to process USD payments. 

Read how our research experts assess the situation in our Weekly Wrap of 17 March.


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