Five Things to Know in Crypto Today: USDC Repegging on SVB News

Key Insights:

• US Regulators and the US Government attempt to restore confidence by guaranteeing depositors’ funds.
• Binance announces plans to convert the $1 billion Recovery Fund from stablecoin to crypto.
• Ripple CEO confirms deposits with SVB, with Circle affirming availability of $3.3 billion on Monday.

US Regulators Deliver a Weekend Crypto Rebound

Before the weekend, the total crypto market cap fell for five consecutive days to a current week low of $873.25 billion.

However, it was a reversal of fortunes on Saturday and Sunday. Hopes of a Silicon Valley Bank (SVIB) intervention delivered Saturday support before the news hit the wires of US regulators making whole SIVB creditors.

The crypto-market-friendly news drove the crypto market cap up by $75.2 billion to $983.70 billion. Silicon Valley Bank (SIVB) and Signature Bank (SBNY) news drove demand for riskier assets.

US regulators announced that all customers would have access to their deposits from Monday. Additionally, the Federal Reserve created a new Bank Term Funding Program to offer loans with a maturity of one year to depository institutions. Institutions would pledge Treasuries and other held assets as security.

While the news eased SVB contagion risk, recent events highlighted the impact of aggressive Fed monetary policy on the banking sector. With the Federal Reserve holding an emergency meeting later today, the Fed could announce the need to pause monetary policy tightening to carry out a US banking stress test.

Further rate hikes would likely adversely affect other regional banks. Another collapse could irreversibly erode confidence in the US banking sector and drive demand for alternative solutions, including cryptos.

This morning, the crypto market cap was up $9.71 billion to $993.40 billion, reversing a $5.40 billion loss from last week.

Ripple CEO Acknowledges Exposure to Silicon Valley Bank

On Sunday, Ripple CEO Brad Garlinghouse affirmed that Ripple has US Dollar deposits with Silicon Valley Bank. However, Garlinghouse refrained from disclosing the amount, saying,

“Ripple had some exposure to SVB – it was a banking partner and held some of our cash balance. Fortunately, we expect NO disruption to our day-to-day business, and already held a majority of our USD w/ a broader network of bank partners.”

The Ripple CEO made the statement on Twitter before the Federal Reserve and US Treasury Department announcements.

However, XRP was down 1.36% to $0.36885 as investors await rulings relating to the Hinman Documents and Summary Judgment Reply Briefs.

USD Coin Re-Peg in Process While Main Street Reliance Raises Questions

The US Treasury Department and Federal Reserve announcements delivered USD Coin (USDC) with much-needed support.

On Saturday, Circle issued an update on USDC and Silicon Valley Bank, saying,

“It is possible that SVB may not return 100% and that any return might take some time, as the FDIC issues IOUs (i.e., receivership certificates) and advanced dividends to deposit holders.”

The SVB statement went on to say,

“In such a case, Circle, as required by law under stored-value money transmission regulation, will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.”

Following the Sunday news on Silicon Valley Bank, Circle no longer needs to plug a $3.3 billion hole, supporting a move toward $1.00.

However, the USD Coin’s exposure to regional banks raises concerns, with concentration risk having left USD Coin exposed to an SVB collapse. As regulators attempt to clamp down on the digital asset space and Main Street’s exposure to cryptos, reducing banking access could increase the risk of losses down the road.

This morning, USDC was up 2.39% to $0.9896, recovering from a weekend low of $0.8553.

Binance Plans to Convert $1 Billion Recovery Fund Assets into Crypto

This morning, Binance CEO CZ announced plans to convert the stablecoins of the $1 billion Industry Recovery Fund into crypto. CZ said,

“Given the changes in stablecoins and banks, Binance will convert the remaining of the $1 billion Industry Recovery Initiatives funds from BUSD to native crypto, including BTC, BNB, and ETH. Some fund movements will occur on-chain. Transparency.”

Shortly after the announcement, CZ returned to Twitter, saying,

“The transfer txid. took 15 seconds and cost $1.29. Imagine moving $980 million through a bank before banking hours on a Monday.”

BTC, ETH, and BNB benefitted from the move. This morning, BNB was up 4.77%, with BTC and ETH seeing gains of 1.72% and 1.45%, respectively. The total crypto market cap was up by a more modest 1.17%.

Shiba Inu Aims for a Four-Day Winning Streak on Shibarium Upgrade News

On Friday, the Shibarium Network announced the release of the Shibarium early beta test. The heavily anticipated Shibarium Upgrade will improve Shiba Inu (SHIB) transaction speeds, reduce fees, and increase the SHIB burn rates, bullish outcomes for SHIB.

SHIB responded favorably to the news, rising by 2.38% on Friday. This morning, SHIB was up 0.83% to $0.00001090. Another bullish session would extend the winning streak to four sessions, its longest winning streak in March.