Banks down? That’s why Bitcoin was created, says the crypto community
The Silicon Valley Bank (SVB) collapse on March 10 has sparked fear, uncertainty and doubt (FUD) throughout the crypto community, prompting many to return to crypto roots – reviving the Bitcoin White Paper published just weeks after the Lehman Brothers meltdown in 2008.
“There’s a whole generation of builders who just read about Lehman and the financial crisis and scoffed at Bitcoin. Now their eyes are wide open. Welcome new friends,” tired Ryan Selkis, founder and CEO of Messari.
About six weeks after the dramatic collapse of Lehman Brothers—the fourth largest investment bank in the United States at the time—Satoshi Nakamoto released the now famous white paper, paving the way for the rise of the Bitcoin network.
Some blame the SVB failure on rising interest rates in the US. The Federal Reserve raised its benchmark interest rate last year to more than 4.5% – the highest rate since 2007. In January, the US inflation rate was 6.4%.
Many crypto and tech companies are affected by the collapse of Silicon Valley Bank. SVB, a Federal Deposit Insurance Corporation-insured bank, was in the process of shutting down operations when USD Coin (USDC) issuer Circle initiated a wire transfer to remove the funds. Circle revealed that it was unable to withdraw $3.3 billion of its $40 billion reserves from SVB, prompting a selloff and the stablecoin price falling below the $1 peg.
The stablecoin ecosystem felt an immediate effect when USDC was decoupled from the US dollar. The USDC’s civilian influence caused other stablecoins to decouple from the dollar. Dai (DAI), a stablecoin issued by MakerDAO, lost 7.4% of its value due to USDC’s depegging, Cointelegraph reported.
Other popular stablecoins, such as Tether (USDT) and Binance USD (BUSD), continue to maintain a 1:1 peg to the US dollar.
Circle said it now, along with other customers and depositors, demands the continuity of SVB, which the company claimed is important to the US economy. Circle stated on Twitter that it would follow state and federal regulators’ guidance.
SVB was shut down by the California Department of Financial Protection and Innovation for undisclosed reasons on March 10. California’s watchdog appointed the Federal Deposit Insurance Corporation (FDIC) as receiver to protect insured deposits. However, the FDIC only insures deposits up to $250,000 per depositor, institution and ownership category.
