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HSBC buys SVB UK, Signature Bank closes, Yellen says depositors protected, USDC loses peg

HSBC buys SVB UK, Signature Bank closes, Yellen says depositors protected, USDC loses peg
Federal Reserve Chair Jerome Powell, left, and US Treasury Secretary Janet Yellen, right, have pledged to protect depositors from the collapse of Silcon Valley Bank.

HSBC buys the UK arm of Silicon Valley Bank for £1

HSBC has swooped in to buy the UK arm of Silicon Valley Bank for just £1 after the lender collapsed last week.

Following the deal, the British branch’s 3,000 business customers will be able to access their accounts and assets as usual.

The news is a relief to British tech companies who worried that they would go bust without help.

UK finance minister Jeremy Hunt said the government had worked over the weekend to protect the “fragile” tech ecosystem, which consecutive Conservative governments have made a point of championing.

“The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs,” Hunt said. “I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.

“Today the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support.”

Silicon Valley Bank collapses, put up for auction

Tech-friendly Silicon Valley Bank went from operating to auctioned over the weekend, dragging crypto markets down with it. The bank’s descent into liquidation began on Thursday as the company announced a $21 billion bond selloff.

Crypto-native venture capital investors exposed to Silicon Valley Bank instructed portfolio managers to withdraw funds immediately, and by the next day regulators in the bank’s home state of California took possession of the bank, “citing inadequate liquidity and insolvency.”

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The collapse follows that of crypto-friendly Silvergate Bank earlier in the week.

READ MORE: Bitcoin ignores macro moves, says the NY Fed. Experts disagree

US regulators pledge to protect depositors as Signature shuttered by state authorities

In a joint statement made Sunday by the US Department of the Treasury, the Federal Reserve, and the FDIC, the agencies plan to honour all deposits in both Silicon Valley Bank and Signature Bank. New York’s Signature was closed Sunday by its “state chartering authority.”

Treasury Secretary Janet Yellen said that prospects of a government bailout of SVB were off the table.

The banks’ woes marks perhaps the country’s largest financial crisis since 2008.

READ MORE: Silvergate short seller says he’s betting against Signature: ‘Binance is next’

Circle’s USDC loses peg as $3.3bn revealed to be held in Silicon Valley Bank

USDC fell as low as $0.82 against its dollar peg over the weekend, as parent company Circle revealed that $3.3 billion in USDC reserves are held in ailing Silicon Valley Bank. In a Friday tweet, Circle clarified that is one of six banks holding the company’s cash reserves, which amount to 25% of total reserves.

The “depeg,” which denotes a stablecoin decoupling from its paired asset – in this case the US dollar – marks a significant selloff, given USDC’s $40 billion total value. Circle later reaffirmed the company’s commitment to keep the asset backed 1:1, and investors and arbitrageurs alike saw USDC’s price returned to its peg on Sunday.

Lending Protocols MakerDAO, Aave, scramble to address stablecoin risk

DeFi lending protocols Aave and MakerDAO are scrambling to contain risk as the weekend saw popular stablecoins such as USDC, DAI, and FRAX temporarily lose their pegs to the US dollar.

MakerDAO’s risk management entity issued a proposal Saturday to the protocol’s decentralised autonomous organisation “intended to limit Maker’s exposure” to risky stablecoins while maintaining the peg of its own native stablecoin, DAI. The proposal sees debt ceilings drastically altered to restrict leverage on the protocol.

Aave’s community took a different route, voting to freeze stablecoins USDC, USDT, DAI, FRAX, and MAI on the protocol. The company tweeted that the “measure prevents new positions from adding risk to the protocol.”

Cathie Wood’s Ark Invest buys more Coinbase, holdings exceed $500m

Investor Cathie Wood’s Ark Invest scooped up more than 350,000 shares of Coinbase stock on Thursday, marking the firm’s biggest COIN purchase this year. The purchase comes as Coinbase shares sank with the rest of the crypto markets following news of crypto-friendly Silvergate Bank’s collapse on Monday. Ark now owns over $500 million in COIN, with a 3.8% share in the company. In Coinbase news, following the purchase the company tweeted Friday that it has $240 million in corporate cash stuck in now-shuttered Signature Bank, and is depending on the FDIC to retrieve the funds.

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