The California Department of Financial Protection and Innovation shut down Silicon Valley Bank. This development has shaken the whole US financial system. In the aftermath of this development, ten companies have reported their exposure to SVB.
Here’s a list of the ten most affected companies, including Circle ($3.3 billion), Roku ($487 million), BlockFi ($227 million), Roblox ($150 million), Ginko Bio ($74 million), Irhythm ($55 million), RocketLab ($38 million), Sangamo Therapeutics ($34 million), LendingClub ($21 million), and Payoneer ($20 million).
As it is apparent from the chart above, Circle’s exposure to the SVB issue is $3.3 billion. Circle is the most affected company from the issue. This, in addition to the strict scrutiny from the regulators, has made the issuing of new USDC difficult for the issuers.
The reserves of Circle related to USDC comprise 8% of the total USDC reserves. After the announcement of the bailout package for the troubled banks by the FED, USDC is set to recover its $1 peg on Monday, March 13, when the banks open for business.
Brad Garlinghouse, the CEO of Ripple, has also announced the company’s exposure to the SVB. Silicon Valley Bank was a banking partner of Ripple, and also held some reserves for the company. However, Ripple expects no disruption in its daily operations as the company holds the majority of its reserves in other banks.
The Collapse of Crypto-Friendly Banks
Silicon Valley Bank is the largest US-based financial institution to fail since the 2008 recession, and it isn’t the only one to collapse in recent times. It is only one bank in the whole series of collapsing crypto-friendly banks.
Silvergate bank also closed its operations in early March. This happened when the financial strength of the company was severely damaged by the recession in the crypto market. This caused the shares of Silvergate bank to drop significantly in value.
Another recent example is Signature bank, another big bank supporting cryptocurrencies. This was done by the regulators to avoid any further damages done by the bank to the US economy.
Because of the recent developments, FED has announced a bailout package of $25 billion for the affected banks. This is done to restore the people’s faith in the US banking system and to prevent the affected banks from transferring their losses to their users.
After the announcement of the bailout package, USDC funds, as well as every other cryptocurrency deposit connected with the affected banks, are now safe and unaffected. USDC, which plummeted to $0.87 on the collapse of SVB, has also recovered to $0.99 after the news of the bailout.