Okay if you had bank runs on your bingo card for the year congrats to you because that was not something that I saw coming. That being said here we are and more importantly how is the industry going to handle this turn of events? Looking through Silicon Valley Bank and who is disrupted by what has gone on interestingly a majority of the companies that held money there appear to fall into the biotech realm or other cutting-edge sciences.
It seems that Circle, the issuer of USDC, was the one major player in the crypto space that held a ton of money there to the tune of $3.3 billion. Now if it had been normal rules/operations Circle would only roughly get back $250,000 of this since that is where the standard insurance stops and according to Silicon Valley Bank (SVB), most of their deposits were not insured past this point. For once though the Government and Fed seem to be thinking about what is best for everyone and have made it to where the money in the accounts will be accessible.
This has resulted in USDC being able to almost completely regain in peg since the money will be there for Circle. That is not to say that Circle is in the clear as they will have access to this money but I am not sure where exactly they will be putting it. One of the Four Big Banks like JP Morgan could make huge inroads in the industry if they work with Circle and take on this cash.
From the 2007-2008 banking crisis, Bitcoin emerged and has since changed all of our lives on this sub in one way or another. Since all the major banks that have interacted with crypto have now gone down it leads me to wonder what the industry will come up with to address this issue. At the end of the day, onboarding and offboarding funds are going to be critical things to figure out and while banks would have been an easy solution to this we are now seeing that that could be an issue moving forward. Central exchanges have also come under increased heat recently with Kracken receiving a fine a couple of weeks ago and now KuCoin under fire by the State of New York.
Crisis in the world and the industry has led to innovation and I am optimistic about the future and see what type of solution is created going forward!
Originally posted in r/cryptocurrency
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