Major Crypto Coins Stabilize After US Intervention in SVB Collapse

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LONDON, March 13 (Reuters) – Major cryptocurrencies stabilized on Monday after U.S. authorities announced plans to limit the fallout from the collapse of Silicon Valley Bank (SVB) and stablecoin issuer USD Coin declared that it remained redeemable with the dollar.

US authorities on Sunday launched emergency measures to boost confidence in the banking system after the bankruptcy of SVB (SIVB.O) threatened to trigger a wider financial crisis, and said SVB customers would have access to their deposits from Monday.

USD Coin, also known as USDC, recovered to $0.998 from a record low of $0.87 hit on Saturday, well below its expected 1:1 peg to the dollar. The fall was triggered by concerns over the exposure of Circle – the US company that issues USDC – to SVB.

Major cryptocurrency bitcoin, meanwhile, gained 6% to $23,350, a recovery of more than 13% from its lows hit the previous day.

Jeremy Allaire, CEO of USDC issuer Circle, said in a tweet on Sunday that the company’s $3.3 billion USDC reserve deposit – about 8% of its total – held at SVB would be fully available. when US banks open on Monday.

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

New Jersey-based Cross River did not immediately respond to a request for comment.

Stablecoins such as USDC, second in market size, are a crucial cog in the world of crypto trading. They are designed to hold a stable value and are usually backed by reserves of traditional assets such as dollars, bonds or gold.

Crypto-exposed stocks also rallied.

Crypto miners Riot Blockchain (RIOT.O) and Marathon Digital (MARA.O) both gained more than 11%, while US crypto exchange Coinbase Global (COIN.O) added 6.3%.

Analysts warned that market sentiment would remain skittish despite the US measures.

“Markets remain volatile since the failure of SVB,” said Alvin Tan, head of FX strategy at RBC Capital Markets in Singapore. “The situation is evolving, but volatility should remain high in the coming days.”

CRYPTOBANK

The relief for crypto was tempered by New York’s top financial regulator’s takeover of Signature Bank (SBNY.O), a key banking firm for crypto companies.

With the fall of SVB and California-based Silvergate Bank, its closure means that three of the major US banks used by crypto firms have gone bankrupt this year.

Shares in Signature Bank have been suspended for trading, with US officials saying Signature Bank depositors will be reimbursed with no loss to the taxpayer.

Its fall represents another blow to the connections between the crypto and banking sectors, already strained by a growing US regulatory crackdown.

Major U.S. exchange Coinbase Global Inc (COIN.O) tweeted on Sunday that after Signature’s fall, it was “facilitating all customer cash transactions with other banking partners.” According to the Coinbase website, these are JPMorgan Chase, Cross River Bank, and South Dakota-based Pathward.

Coinbase said as of Friday’s close, it had a balance of approximately $240 million in corporate cash at Signature, but expects to fully recover the funds.

Additional reporting by Tom Wilson and Elizabeth Howcroft in London, and Medha Singh, Shubham Kalia and Baranjot Kaur in Bangalore; Editing by Kim Coghill, Jacqueline Wong and Uttaresh Venkateshwaran

Our standards: The Thomson Reuters Trust Principles.

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