Less than 72 hours after Silicon Valley Bank (SVB), a prominent U.S. tech bank, collapsed, rescue efforts may already be underway, according to a March 11 post by Unlimited Funds chief investment officer Bob Elliot. Elliot claims that in many projects "big banks are actively working to buy svb businesses" and that the FDIC plans to cover 95% of unincorporated depositors to acquirers and "will pay 50% of uninsured depositors next." Sign up for Depositors Week."
The issuer of the USD Coin (USDC) stablecoin has more than $3.3 billion in reserves stranded in troubled banks out of a total of more than $40 billion. Additionally, SVB reportedly managed around $5 billion in funding for prominent blockchain venture capital firms such as a16z, Pantera Capital, and Paradigm. USDC dropped its one-to-one peg to the U.S. dollar earlier today, trading as low as $0.87 before slowly repegging back to $0.95 at press time.
While the reports are currently unconfirmed, multiple sources have confirmed that a number of different resolution avenues are being investigated, with depositors getting back "at least 50% of their deposits" within the next week. Hal Press, founder of investment firm North Rock LP, said: "In the long run, they will likely get more than 90% of their money back, and there will likely be no depositors losing a dollar."
On the same day, Mike Moïse, associate director at business consultancy CrossCountry Consulting, made similar comments, citing secondary sources: "SVB's customers will unfreeze $250,000 on Monday and about 50% of the remaining balance will be distributed to depositors within 1-2 days of Monday (money market accounts may receive 100%). The remainder will depend on future recoveries; Most recovery will be completed within 3-6 months."
Previously, DeFi analyst Loki Zeng estimated USDC's net worth at "$0.885 in extreme cases and $0.985 in normal cases," commenting that "even if there are problems, they won't be as serious as FTX." Blockchain Analysis Company Nansen’s CEO, Alex Svanevik, also said that Circle and USDC “can do it” as long as there is “best-in-class execution” within the next few days. Similar to USDC, the DAI stablecoin itself is backed by more than $3.1 billion in USDC, with most of its losses already matched, trading at $0.97 per coin at press time. Earlier today, Maker DAO, the issuer of DAI, submitted an emergency proposal to modify the protocol risk parameters following the USDC decoupling event.
