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The New York Department of Financial Services and the US Federal Reserve Board have published their internal reviews on the handling of Signature Bank and Silicon Valley Bank's failures. The string of bank failures, including Silvergate Bank's voluntary liquidation, has prompted regulators to re-evaluate their supervision. (Read More)
<p>The banking industry is facing instability, and in the US, problems became clearly visible when three crypto-friendly banks ran into trouble earlier this month. These entities are the now well-known Silvergate Bank, Silicon Valley Bank, and Signature Bank.</p><p> Signature has since been taken over by Flagstar Bank, and this week, news came in that Silicon Valley Bank had been purchased by First Citizens Bank, with the new owners stating there was a structure “to purchase all of the assets and liabilities,” as part of “a whole bank purchase.”</p><p> These continuing events have caused a flurry of speculative claims and counter-claims. Some advocates for the crypto industry assert that a clandestine operation is in process, dubbed Operation Choke Point 2.0, to shut down crypto in the US by cutting off links with conventional banking services.</p><p> Others have replied that such claims lack substance and that the banks in question were riddled with problems of their own making, some of which were related to crypto (and <a href="https://www.financemagnates.com/cryptocurrency/ftx-the-rise-the-fall-and-the-reaction/" target="_blank" rel="follow">notorious entities such as FTX</a>) and some of which were more standard financial problems, but none of which are evidence of conspiracy.</p><p> Whichever side of the debate is closer to the truth, the most immediate practical questions are around how crypto companies in the US can now access banking services and what happens next.</p><p>Silvergate: the First Domino</p><p>When Silvergate Bank went out of operation, it was the first domino to fall, and several large crypto entities, including <a href="https://www.financemagnates.com/tag/Paxos/" target="_blank" rel="follow">Paxos</a>, <a href="https://www.financemagnates.com/tag/BitStamp/" target="_blank" rel="follow">BitStamp</a>, and <a href="https://www.financemagnates.com/tag/Coinbase/" target="_blank" rel="follow">Coinbase</a>, abruptly shifted their business elsewhere.</p><p> Coinbase currently <a href="https://help.coinbase.com/en/coinbase/other-topics/legal-policies/how-is-coinbase-insured" target="_blank" rel="nofollow">lists</a> the following as institutions it uses for depositing customer funds:</p><ul><li> Signature Bank</li><li>JP Morgan Chase</li><li>Cross River Bank</li><li>Pathward</li></ul><p> Note that after Signature Bank went into receivership, and Flagstar Bank then bought its deposits and loan portfolios, that deal did not include digital assets.</p><p> A key technical issue for crypto entities following the closure of Silvergate was their sudden inability to utilize the Silvergate Exchange Network (SEN), which was a private network that could facilitate fiat/crypto exchanges around the clock, an operation critical to working with crypto.</p><p> The first solution was to move over to <a href="https://www.financemagnates.com/tag/Signature-Bank/" target="_blank" rel="follow">Signature Bank</a>, which had its similar system called Signet, but it wasn’t long until it was the turn of Signature Bank to hit critical problems, ending up in FDIC receivership.</p><p> As mentioned, a notable characteristic of the Flagstar purchase of Signature is that Signature’s digital operations, including Signet, were not acquired, staying, instead, under the control of the FDIC. Central crypto platform Coinbase then announced that it would no longer support Signet (which was reported as being still operational).</p><p> It’s known that the technology provider Tassat, which developed the Signet system, also provided similar products to regional banks in the US, including Customers Bank, Western Alliance, Byline, and Cogent, and when it comes to this kind of tech, there’s also Cross River Bank, which provides a real-time <a href="https://www.crossriver.com/fintech/payment-rails/real-time" target="_blank" rel="nofollow">payments system</a> incorporating a fiat on/off ramp.</p><p> USDC stablecoin issuer Circle was also forced to stop using Silvergate, and a glance at its <a href="https://www.circle.com/en/transparency" target="_blank" rel="nofollow">reserves information</a> indicates that it has US Treasuries and cash held at The Bank of New York Mellon. Circle's CEO, Jeremy Allaire, stated, when Silvergate ceased operations, that the Bank of New York Mellon was being used for settlements before the next day announcing that Cross River Bank would take over to provide automated settlements.</p><p> It is apparent, then, that banking services, including all-hours networks facilitating fiat/crypto exchanges, are currently available. However, there have also been reports of concerns about the crypto industry’s risk profile and of banks being cautious about being openly crypto-friendly due to concerns about the possible actions and intent of, at times, unpredictable regulatory bodies.</p><p>Investors Not Scared</p><p>Strikingly, it appears that the potential for a greater banking crisis, coupled with what some are describing as regulatory hostility towards crypto, is not scaring away investors. In fact, the opposite may be true.</p><p> Steven Lubka, the Head of Private Clients and Family Offices at Swan Bitcoin, a financial services company that assists clients in acquiring and holding Bitcoin, explained that while these current banking crises have been unfolding, his company has seen “ and CEOs allocating 1-5% of the corporate treasury in case of emergency.”</p><blockquote class="twitter-tweet"><p lang="en" dir="ltr">I run the Private Wealth team for a <a href="https://twitter.com/hashtag/Bitcoin?src=hash&ref_src=twsrc%5Etfw">#Bitcoin</a> company ??I can absolutely 100% guarantee you that we are seeing new clients come in who are buying <a href="https://twitter.com/hashtag/Bitcoin?src=hash&ref_src=twsrc%5Etfw">#Bitcoin</a> specifically to hedge against banking failures This is simply a real thing which is occurring <a href="https://t.co/eNi8cLLK6R">https://t.co/eNi8cLLK6R</a></p>— Steven Lubka (@DzambhalaHODL) <a href="https://twitter.com/DzambhalaHODL/status/1638579316551294980?ref_src=twsrc%5Etfw">March 22, 2023</a></blockquote><p> It should also be noted that within crypto, along with pushback against perceived overreach by regulators, there has also been a pivot towards creating new financial rails that bypass traditional banks altogether.</p><p> Chief Economist at Circle, Gordon Liao, has recently argued the case for decoupling payments and banking, and Coinbase's CEO, Brian Armstrong, has publicly <a href="https://twitter.com/brian_armstrong/status/1635131491796787201?s=20" target="_blank" rel="nofollow">speculated</a> on the idea of Coinbase becoming a neo bank, operating outside existing conventions.</p><p> What can currently be said for sure is that though the situation around crypto companies, banking services, and even the possibility of crypto-oriented <a href="https://www.financemagnates.com/tag/neobanks/" target="_blank" rel="follow">neobanks</a> remains volatile and unresolved, the crypto industry itself remains as active as ever and navigates new routes when required.</p> This article was written by Sam White at www.financemagnates.com.
Four stablecoins have reduced their supplies this month, while the stablecoin token TrueUSD (TUSD) has seen its supply jump 110% higher over the last 30 days. TUSD resides natively on four different blockchains. The number of Ethereum-based TUSD rose 27%, while the number of Tron-based TUSD stablecoins increased by 218%. TUSD Supply Swells, Tron-Issued Stablecoins [...]
The post Stablecoin Supply Shift: TUSD Jumps 110% While Others Experience Reductions appeared first on Crypto Breaking News.
The recent banking failures involving the fall of Silicon Valley Bank (SVB), Signature Bank, and Silvergate Bank, have high-profile government individuals trying to find a culprit. U.S. President Joe Biden and former President Donald Trump have publicly blamed each other’s policies for the outcome, but according to some analysts, the problem might be ignorance in [...]
The post While Biden and Trump Blame Each Other for Bank Failures, Others Believe the Cause Might Be a Management Issue appeared first on Crypto Breaking News.
On Friday, Michael Barr, the vice chair for supervision at the U.S. Federal Reserve, published a report on the vulnerabilities that led to the ultimate failure of Silicon Valley Bank (SVB). In addition, Marshall Gentry, the chief risk officer of the Federal Deposit Insurance Corporation (FDIC), released a similar report on Signature Bank’s collapse and [...]
The post Reports by Fed and FDIC Reveal Vulnerabilities Behind 2 Major US Bank Failures appeared first on Crypto Breaking News.
On Tuesday, the U.S. Senate Committee on Banking, Housing, and Urban Affairs, also known as the Senate Banking Committee, held a hearing to discuss the recent bank collapses in the United States and the regulatory response. Throughout the testimonies, digital assets and crypto businesses were mentioned. Senate Banking Committee chairman Sherrod Brown claimed on Tuesday [...]
The post Senate Banking Committee Holds Hearing on Recent Bank Collapses, Calls for Tougher Regulations appeared first on Crypto Breaking News.
First Citizens Bank will acquire all deposits and loans of Silicon Valley Bank after its collapse following rumors of a liquidity crisis. The FDIC has approved the purchase and assumption agreement, and Silicon Valley Bank depositors will become depositors of First Citizens Bank. The North Carolina-based bank is now the 30th largest commercial bank in the US. (Read More)
In April there hasn’t been a single day where total sellers on the market haven’t exceeded total buyers.
First-Citizens Bank is set to acquire the assets of the failed Silicon Valley Bank (SVB) — valued at $72 billion for a discount of $16.5 billion.
The post First Citizens Bank to acquire failed Silicon Valley Bank assets at a discount appeared first on CryptoSlate.
The deal was announced on March 26 by the Federal Deposit Insurance Corporation (FDIC).
With the collapse of US banks, we explore the perspectives of different stakeholders on if this contagion will lead to stricter regulations.
The post How Bank Failures in the US Could Impact Philippine Crypto Regulations appeared first on BitPinas.
Steve Hanke, a professor of Applied Economics at Johns Hopkins University, is the latest scholar to trash Bitcoin. Bitcoin Has No Fundamental Value, Says Professor In a tweet on March 26, Hanke said Bitcoin is not a currency but a speculative asset whose fundamental value is zero. He appeared to back fiat, including the Japanese [...]
The post Why This Economics Professor Thinks Bitcoin Is Worthless appeared first on Crypto Breaking News.
Jeremy Allaire, CEO of Circle, the company behind the issuance of usd coin (USDC), has expressed his worries about the state of stablecoin regulation in the U.S. In a congressional hearing, Allaire stated that other governments were already regulating the issuance of digital dollars (dollar-backed stablecoins) and called on the U.S. government to act by [...]
The post Circle CEO Jeremy Allaire: ‘Other Governments Are Regulating Digital Dollars Before the US’ appeared first on Crypto Breaking News.
Despite banking laws stating that remedies should not be aimed at benefiting a specific bank, this change could be structured “in a way to ensure” First Republic benefits, according to unnamed sources.
United States authorities are reportedly deliberating on extending an emergency credit line for banks, “in ways” which may provide First Republic Bank with a time buffer to address its balance sheet concerns, according to people with knowledge of the situation. In a March 26 Bloomberg report citing unnamed sources, it was reported that U.S. officials [...]
The post US contemplates ‘expanding’ emergency lending facility for banks: Report appeared first on Crypto Breaking News.
A recent review of Nigerian banks’ bond portfolios showed that the institutions were not directly exposed to Silicon Valley Bank, the governor of the country’s central bank has said. In addition, the governor said the Central Bank of Nigeria’s stringent guidelines help to create a “very safe” banking system. Priority Given to Depositors According to [...]
The post US Banking Crisis: Nigerian Banks Not Directly Exposed to SVB Says Central Bank Governor appeared first on Crypto Breaking News.
Janet Yellen called for further regulation of nonbank institutions claiming they pose a systemic risk to U.S. financial stability.
United States Federal Reserve chairman Jerome Powell has conceded that his regulator was blindsided by the sudden collapse of Silicon Valley Bank (SVB), despite it being under their watch. In a press conference held just after the Federal Open Market Committee meeting on March 22, Powell said he immediately knew there was a need for [...]
The post ‘How did this happen’ — Powell says Fed stumped over the collapse of SVB appeared first on Crypto Breaking News.
Despite Silicon Valley Banks implosion, the Federal Reserve has elected to keep tightening monetary conditions in the United States. 4.75% to 5% range The Federal Reserve is pushing on in...
While the existence of “Operation Choke Point 2.0” has not been confirmed, Mick Mulvaney spoke of “rumors” of its existence and the potential side effects of such a policy.
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