Relief efforts are underway less than 72 hours after the collapse of prominent American tech bank Silicon Valley Bank (SVB), according to a post on Mar. 11 by Bob Elliot, a chief investment officer of Unlimited Funds.
The collapse has affected prominent blockchain ventures capital firms such as a16z, Pantera Capital, and Paradigm, which had an estimated $5 billion in funds custodied by SVB. Circle, the issuer of the USD Coin (USDC) stablecoin, also had over $3.3 billion in reserves stuck in the troubled bank out of over $40 billion.
News Sentiment: Positive
- Multiple Sources Confirm Deposit Guarantees for Silicon Valley Bank Customers, with Long-Term Recovery of 90%+ and No Deposit Losses Predicted
- DeFi Analysts Optimistic About USDC Recovery, Citing Strong Fundamentals and Top-Class Execution as Key Factors
- FDIC to Cover 95% of Uninsured Depositors as Silicon Valley Bank Acquisition Efforts Continue; USDC Depegged but Slowly Recovering
- Conclusion: Relief Efforts Underway for Depositors of Collapsed Silicon Valley Bank Collapse
Multiple Sources Confirm Deposit Guarantees for Silicon Valley Bank Customers, with Long-Term Recovery of 90%+ and No Deposit Losses Predicted
Although the reports are currently unverified, multiple sources confirm that many different tracks to resolution are being worked on and that depositors will get back “at least 50% of their deposits” by next week. Hal Press, the founder of investment firm North Rock LP, stated, “Long term it’s likely they get 90%+ back and very possible no depositors lose a single $.”
Mike Moïse, Associate Director of business advisory firm CrossCountry Consulting, also made similar comments, citing secondary sources. He said, “SVB’s customers will have $250k unfrozen on Monday, and ~50% of the remaining balance dividend to depositers within 1-2 days of Monday (money market accounts likely to get 100%). The remainder will depend upon future recoveries; most recovery will be within 3-6 months.”
DeFi Analysts Optimistic About USDC Recovery, Citing Strong Fundamentals and Top-Class Execution as Key Factors
Previously, DeFi analyst Loki Zeng estimated that the net value of USDC is “$0.885 at the extreme situation and $0.985 at the normal situation” and commented that even if there is an issue, it won’t be as severe as FTX.
Alex Svanevik, CEO of blockchain analytics firm Nansen, also said that the Circle and USDC “can make it,” so long as “top-class execution” is conducted in the next few days. Like USDC, the DAI stablecoin, which over 3.1 billion USDC collateralizes, has paired most of its losses and is now trading at $0.97 per coin.
FDIC to Cover 95% of Uninsured Depositors as Silicon Valley Bank Acquisition Efforts Continue; USDC Depegged but Slowly Recovering
The U.S. Federal Deposit Insurance Corporation (FDIC) is reportedly planning to cover 95% of uninsured depositors to the acquirer, and “50pct of uninsured paid out next wk,” according to Elliot. He also claimed that “big banks are actively working on buying svb business.”
Meanwhile, USDC depegged from its one-to-one U.S. dollar peg to trade as low as $0.87 apiece before slowly re-pegging to trade at $0.95 at the time of publication.
Conclusion: Relief Efforts Underway for Depositors of Collapsed Silicon Valley Bank Collapse
In conclusion, despite the collapse of Silicon Valley Bank, relief efforts are already underway, and depositors are expected to get back at least 50% of their deposits by next week. With multiple tracks to a resolution being worked on, depositors may get 90% + of their deposits back in the long term, with no depositors losing a single dollar.
Although the reports are currently unverified, the U.S. Federal Deposit Insurance Corporation plans to cover 95% of uninsured depositors to the acquirer. Circle, the issuer of the USD Coin (USDC) stablecoin, had over $3.3 billion in reserves stuck in the troubled bank out of over $40 billion. Prominent blockchain ventures capital firms such as a16z, Pantera Capital, and Paradigm had an estimated $5 billion in funds custodied by SVB.
