Tether ‘unequivocally reiterates’ no exposure to Signature Bank

April 5, 2023 Coin Telegraph

Bankruptcy

The stablecoin provider denied the allegations that began to surface in regard to its exposure to the now-collapsed Signature Bank.

After a Bloomberg article alleged exposure between stablecoin provider Tether and the now-collapsed Signature Bank, rumors began to circulate regarding the involvement between the two companies.

However Tether immediately reached out to clarify the claims made in the original article. In an email sent to Cointelegraph among other outlets, Tether gave an official response to the situation in which it said it wants to “unequivocally re-iterate that it has no exposure to Silvergate, Silicon Valley Bank and Signature Bank.”

The stablecoin issuer went on to highlight a section of the article that pointed out no issue of a collaboration between Tether and Signature Bank, and that it “failed” to explain that there was no account set up.

Cointelegraph reached out to Tether for further clarification on the situation.

Initial claims in the article said that Tether was gaining access to the United States banking system through Signature by encouraging users to send U.S. dollars via Signature’s Signet to its Bahamian partner Capital Union Bank.

These claims from Bloomberg surfaced despite the fact that Tether chief technology officer Paolo Ardoino took to Twitter on March 12 to clarify that the company had zero exposure to Signature Bank. On March 2 and 10 he tweeted that the company had no exposure to Silvergate and Silicon Valley Bank (SVB), respectively.

At the recent Paris Blockchain Week 2023 event, Ardoino told Cointelegraph that Tether has around $1.7 billion in excess reserves. He continued to call USDT (USDT) one of the “safest assets to hold in the world” in the aftermath of the banking crisis.

This comes after Tether came back at the Wall Street Journal’s ‘stale allegations’ on March 3 that the company faked documents to open bank accounts. The report alleged that Tether faked sales invoices, transactions and hid behind third parties to have opportunities to open bank accounts it couldn’t have otherwise.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

How the Federal Reserve Is Now Competing With Banks for Deposits: Enter the Reverse Repo Facility

April 4, 2023 Bitcoin.com

Stablecoins are solution to crypto’s banking problem, exec says

March 29, 2023 Coin Telegraph

Banks

Stablecoins are seen as a potential solution to crypto’s banking problem, but some of them are currently not immune to banking issues.

The collapses of banks like Silvergate have certainly impacted cryptocurrency exchanges but there are ways for the industry to survive without the support of banks, one executive believes.

Crypto exchanges significantly rely on traditional banking systems for customer deposits, which makes them vulnerable to various banking issues, according to Bitstamp USA CEO and global commercial officer Bobby Zagotta.

The executive believes that stablecoins — cryptocurrencies whose value is tied to fiat currencies or other assets — could be a solution to crypto’s banking problem.

“We are currently discussing how stablecoins can offer us an alternative to traditional banking,” Zagotta said in an interview with Cointelegraph on March 27. He added that stablecoins could potentially unlock new capabilities for the industry, allowing it to look at banking from a new perspective and to go back to the genesis and purpose of crypto, adding:

“One of the founding principles of our industry is to enable individuals to transact without dependence on third-party institutions, so there are other possibilities to be explored, such as the use of stablecoins to reduce frictions born of the banking system.”

According to Zagotta, stablecoins provide many benefits like faster and more cost-effective transactions, reduced reliance on banks and increased liquidity. “Depending on regulations it's possible we will see a continued evolution and integration of stablecoins within exchanges amid the banking crisis,” the exec stated.

In the interview, Zagotta emphasized that the crypto industry needs to figure out the factors that led regulators to step in at Signature bank. That is necessary for the industry to ensure that crypto-friendly banks are operating in a safe and sustainable manner moving forward. He also cautioned exchanges against creating more risk for customers by hastily moving customer funds around different U.S. banks that may be stressed or at risk.

According to the exec, Bitstamp currently has 15 banking partnerships globally, including U.S. banks like Customers Bank and MVB Bank, as well as European banks like LHV Bank and Gorenjska Banka that can process payments in USD as well. “We are also in conversations to onboard United Texas Bank, Western Alliance Bank, Axos Bank, and Cross River Bank to ensure we maintain a robust network in the midst of all of this change,” Zagotta added.

While Bitstamp is looking at stablecoins as a potential solution to crypto’s banking problem, it’s worth noting that some major stablecoins like USD Coin (USDC) aren’t immune to banking problems themselves. USDC issuer Circle faced major issues in March due to its $3.3 billion exposure to the collapsed Silicon Valley Bank (SVB). The events caused USDC to briefly lose its 1:1 peg with the U.S. dollar.

According to media reports, the banking crisis has been subsiding over the past few weeks but isn’t close to being over. According to José Manuel Campa, the head of the European Banking Authority, European banks have remained vulnerable following the demise of SVB and the subsequent emergency rescue of Credit Suisse by UBS.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Michael Saylor’s MicroStrategy repays Silvergate loan and buys 6.5K BTC

March 27, 2023 Coin Telegraph

Bitcoin Price

MicroStrategy has increased its total Bitcoins holdings to 138,955 BTC, purchased for $4.1 billion at an average of $29,817 per coin.

MicroStrategy, a business intelligence firm and a major Bitcoin (BTC) investor, is acquiring more BTC amid the recent cryptocurrency market recovery.

MicroStrategy co-founder and former CEO Michael Saylor took to Twitter on March 27 to announce that the firm has repaid its $205 million loan to Silvergate.

Citing a form 8-K filing with the United States Securities and Exchange Commission, Saylor stressed that MicroStrategy repaid the Silvergate loan at a 22% discount.

The company has also acquired a significant stash of Bitcoin, purchasing 6,455 BTC for $150 million, or at an average price of $23,238 per coin as of March 23, the former CEO said. With the purchase, MicroStrategy has increased its total Bitcoins holdings to 138,955 BTC, bought for $4.1 billion at an average of $29,817 per coin, Saylor said.

MicroStrategy repaid its $205M Silvergate loan at a 22% discount. As of 3/23/23, $MSTR acquired an additional ~6,455 bitcoins for ~$150M at an average of ~$23,238 per #bitcoin & held ~138,955 BTC acquired for ~$4.14B at an average of ~$29,817 per bitcoin. https://t.co/ALp9VLkTpt
— Michael Saylor⚡️ (@saylor) March 27, 2023

This is a developing story, and further information will be added as it becomes available.

Kraken to suspend Plaid withdrawals and deposits via ACH Silvergate

March 23, 2023 Coin Telegraph

Banks

Joined the Silvergate Exchange Network back in 2019, Kraken is now looking for new ACH funding options.

Major cryptocurrency exchange Kraken is experiencing difficulties with the withdrawal and deposit channel related to the automated clearing house (ACH) via Silvergate.

Kraken has reportedly notified its users that it will be unable to support ACH deposits and withdrawals starting from March 27. According to multiple online reports by alleged Kraken users, Kraken sent an email notice with the announcement on March 22.

In the statement, Kraken specified that users will no longer see a deposit option via Plaid or withdrawal option via ACH Silvergate beginning March 27. “No other services will be affected by this change, including ACH instant purchases via Online Banking,” the firm noted.

Kraken has advised users to take a look at the other available funding options in order to ensure uninterrupted funding experience, including MVB Bank for Fedwire deposits and withdrawals as well as other instant purchase options.

“Our team is working to make ACH funding available again as soon as possible,” Kraken stated.

KRAKEN WILL “NO LONGER SUPPORT ACH DEPOSIT AND WITHDRAWALS” STARTING MARCH 27TH.

CHOKE CHOKE CHOKE pic.twitter.com/kKLpWi5oYi
— DIRTY BUBBLE MEDIA: BYE BYE BYE (@MikeBurgersburg) March 22, 2023

Silvergate is one of the crypto-friendly U.S. banks that collapsed in early March alongside other lenders like Silicon Valley Bank. The events have posed major challenges for the cryptocurrency industry due to many crypto firms holding significant exposure to the banks.

Kraken is one of the world’s largest cryptocurrency exchanges at the time of writing, trading more than $1 billion daily, according to data from CoinGecko. In 2019, Kraken joined the Silvergate Exchange Network, which allowed the firm to offer deposits and withdrawals in U.S. dollars from Silvergate accounts.

Kraken is not the only crypto exchange that was forced to halt its ACH deposits and withdrawals via Silvergate. On March 2, Winklevoss brothers-founded exchange Gemini also stopped accepting customer deposits and processing withdrawals through Silvergate ACH and wire transfers.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Yellen defends government intervention to avoid another SVB

March 21, 2023 Coin Telegraph

Banking

The Treasury Secretary of the U.S. Janet Yellen said the federal government will intervene if it is necessary to protect other small lenders.

Nearly two weeks after the collapse of three United States banks - Silicon Valley Bank (SVB), Silvergate and Signature- Treasury Secretary Janet Yellen said the federal government is ready to take action if needed.

According to a Bloomberg report of excerpts from a speech Yellen will give on Tuesday at the American Bankers Association in Washington D.C., the Treasury Secretary said:

“Our intervention was necessary to protect the broader US banking system, and similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”

Yellen is set to defend recent measures taken by the government to defend the banks and the greater economic impact of the situation, calling the government actions “decisive and forceful actions.”

Additionally she said the government intervention helped to maintain the "important role" of small and mid-size lenders in the U.S. economy.

“The Treasury is committed to ensuring the ongoing health and competitiveness of our vibrant community and regional banking institutions.”

U.S. regulators began swiftly working on a plan following the banking crisis, during which Yellen initially said no bailout would be necessary. Instead insured and uninsured deposits were guaranteed at both SVB and Signature by the regulators. The U.S. Federal Reserve also launched a new way to help lenders cover withdrawals.

A meeting has been announced by Congress which is scheduled for Mar. 29, which will delve into failures of SVB and Signature Bank

U.S. President Joe Biden said he is “firmly committed” to holding accountable whoever was responsible for the recent collapses. Biden also stated that shielding depositors involved with SBV and Signature will be at ‘“no cost to the taxpayer."

The Department of Justice and the Securities and Exchange Commission have both reportedly opened inquiries into the incident. Meanwhile, economists have analyzed that over 186 banks in the U.S. are well-positioned for collapse.

US exploring ways to guarantee the country’s 18T of bank deposits: Report

March 21, 2023 Coin Telegraph

Coin Telegraph

The current deposit insurance cap under the FDIC is $250,000, but recent banking collapses have seen calls to increase that amount.

U.S. officials are reportedly studying ways to expand the current scope of deposit insurance that would guarantee all U.S. bank deposits should the current banking crisis worsen.

The current deposit insurance cap under the Federal Deposit Insurance Corporation stands at $250,000, however, following the collapse of several banks in March, there have been calls to increase that amount.

Organizations such as the Mid-Size Bank Coalition of America called on March 18 for the cap to be lifted for the next two years, citing a need to protect depositors and to stop capital being pulled from smaller banks for supposedly safer-looking heavyweights.

According to a March 21 Bloomberg report citing “people with knowledge of the talks,” Treasury Department staff members are currently discussing the possibility of the FDIC being able to expand the current deposit insurance beyond the max cap to cover all deposits. According to the FDIC, domestic U.S. bank deposits totaled $17.7 trillion as of December 31.

After some intense "studying" they realised that they needed $17 trillion to guarantee all bank deposits. pic.twitter.com/Z15HLiBp23
— Coin Bureau (@coinbureau) March 21, 2023

The move would ultimately hinge on what level of emergency authority federal regulators have and if the insurance cap can be increased without formal consent from Congress.

Bloomberg’s sources indicated, however, that U.S. authorities don’t deem such a drastic move necessary at the moment, as recent steps taken by financial regulators are likely to be sufficient.

As such, they stated that a potential strategy is being whipped up just in case the current situation gets worse.

The US Govt says it studies ways to guarantee all bank deposits if the banking crisis grows.

They say that because they know that the banking crisis will grow?

They don’t have the $18 trillion required to protect depositors.#RunOnTheBank while you can.
Gold, Silver, Crypto.
— Kim Dotcom (@KimDotcom) March 21, 2023

In response to Silvergate, Signature Bank and Silicon Valley Bank going bust in recent weeks, the Federal Reserve rolled out the $25 billion Bank Term Funding Program (BTFP) on March 13, as the government pushed to stem any further contagion.

Meanwhile, in a March 20 press briefing, White House Press Secretary Karine Jean-Pierre was specifically asked if the federal government was supportive of a push from small- and mid-size banks to expand FDIC insurance beyond $250,000.

But Jean-Pierrre was tight-lipped on the Biden Administration’s view, saying on that “our goal is to ensure the financial system is stable” and emphasizing that creating a fair playing field was the “focus of Treasury and the bank regulators.”

“And as you saw, due to our actions this week at the direction of the President, Americans should be confident of their deposits. We’ll be there when they — when they need them.”

“And — and so, again, that’s what our focus is going to be. We don’t have any new announcements at this time. But clearly, we want to make sure that our financial system is stable,” she added.

Coinbase May Launch Overseas Trading Platform Amid Domestic Crypto Crackdown: Report

March 18, 2023 The Daily Hodl

Bitcoin market cap grows 60% in 2023 as top Wall Street banks lose $100B

March 18, 2023 Coin Telegraph

Bitcoin market cap grows 60% in 2023 as top Wall Street banks lose 0B

Bank of America

Bitcoin has decoupled from stocks and rising ten years after the Cyprus banking crisis coincided with a BTC price boom.

The market capitalization of Bitcoin (BTC) has added $194 billion in 2023. Its 66% year-to-date (YTD) growth is vastly outperforming top Wall Street bank stocks, particularly as fears of a global banking crisis are rising.

*BTC market cap daily performance chart. Source: TradingView*

Moreover, Bitcoin has decoupled from U.S. stocks for the first time in a year, with its price rising about 65% versus S&P 500's 2.5% gains and Nasdaq's 15% decline in 2023.

*SPX and NDAQ YTD performance vs. BTC/USD. Source: TradingView*

Wall Street banks lose $100B in 2023

The six largest U.S. banks — JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), Morgan Stanley (MS), and Goldman Sachs (GS) — have lost nearly $100 billion in market valuation since the year's start, according to data gathered by CompaniesMarketCap.com.

Bank of America's stock is the worst performer among the Wall Street banking players, with a nearly 17% YTD drop in valuation. Goldman Sachs trails with an almost 12% YTD decrease, followed by Wells Fargo (-9.75%), JP Morgan Chase (1%).

*Wall Street banks YTD performance. Source: TradingView*

The U.S. banks' valuation has slid amid the ongoing U.S. regional banking collapse. That includes the announcement last week that Silvergate, a crypto-focused bank, was closing its doors and the subsequent takeover of Signature Bank and Silicon Valley Bank by regulators.

The crisis further expanded with the near-collapse of First Republic Bank, which was saved at the last moment through a $30 billion combined injection by Wells Fargo, JP Morgan Chase, Bank of America, Citigroup, and others.

Cyprus and Greece deja vu?

The rise of Bitcoin in the face of a growing U.S. banking crisis is similar to how it reacted during banking collapses in Cyprus and Greece.

BTC's price grew by up to 5,000% amid the Cyprus financial crisis in 2013, prompted by the exposure of Cypriot banks to overleveraged regional real-estate companies.

*BTC/USD performance during Cyprus banking crisis. Source: TradingView*

The situation was so dire that Cyprus authorities, in March 2013, closed all banks to avoid a bank run.

When Greece faced a similar crisis in 2015 and imposed capital controls on citizens to avoid a bank run, Bitcoin's price gained 150% during the period.

*BTC/USD performance during the Greece banking crisis. Source: TradingView*

“Fears over the stability of the banking system, along with declining real interest rates, creates a good environment for Bitcoin to rebound," noted Ilan Solot, co-head of digital assets at London broker Marex, adding that the crypto "is seen by some investors as a hedge against systemic risks."

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Banking crisis: What does it mean for crypto?

March 17, 2023 Coin Telegraph

Banking

In our latest Cointelegraph Report, we broke down the main events that led to the collapse of Silvergate, SVB and Signature Bank and explain what this all could mean for crypto.

Last week’s rapid collapse of Silvergate, Silicon Vallley Bank and Signature Bank have highlighted the fragility of the traditional banking sector while depriving crypto of the main fiat on-ramp points in the U.S.

Most observers agree that the collapse of SVB, like the one of Silvergate, was largely the result of unfavourable market conditions and poor risk management.

The shutdown of Signature was more controversial. According to multiple sources, the bank was not facing insolvency and had largely stabilized its capital outflow when U.S. regulators decided take over it last Sunday. Many in the crypto industry saw it as a political decision, aimed at pushing crypto out of the U.S.

Silvergate and Signature were the two main financial institutions providing banking services to crypto companies in the US: following their shutdown, it will be far more challenging for crypto companies to interact with the dollar system.

In the meantime, The collapse of SVB seemed have caused a ripple effect across the global banking sector: Credit Suisse, the second largest Swiss financial institution, is going through a severe crisis which required the Swiss Central Bank to intervene with a $54 billion lifeline.

If you want to know more about the ongoing banking crisis and how it is affecting cryptocurrencies, check out ourr latest Cointelegraph Report and don’t forget to subscribe to our YouTube channel!

silvergate