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The Federal Deposit Insurance Corporation (FDIC) announced the acquisition of Silicon Valley Bank (SVB) by First Citizen Bank & Trust Company, with a $20 billion bankruptcy cost. Silicon Valley Bank (SVB) and its acquisition by First Citizen The government-owned Federal Deposit Insurance Corporation (FDIC) announced the acquisition of Silicon Valley Bank (SVB): Today, we entered into an agreement with First-Citizens Bank & Trust Company to purchase and assume all deposits and loans of Silicon Valley Bridge Bank, N.A.https://t.co/vjDsnQxhrr pic.twitter.com/MI5lXN5y6r — FDIC (@FDICgov) March 27, 2023 In essence, First Citizens Bank & Trust Company, headquartered in Raleigh, North Carolina, acquired all the deposits and loans of the troubled SVB bank, as well as its 17 branches it owned in the United States. Specifically, SVB had $167 billion in total assets and about $119 billion in total deposits. Today’s transaction involved the purchase of about $72 billion of SVB’s assets at a discount of $16.5 billion. Whereas, about $90 billion in securities and other assets will remain in receivership to be disposed of by the FDIC. The 17 former branches of Silicon Valley Bridge Bank, National Association, are opening as First-Citizens Bank & Trust Company on Monday 27 March 2023. The announcement specifies that SVB customers should continue to use their current branch until they receive notice from First-Citizens that system conversions have been completed to allow full banking service at all other branches. In spite of everything, there is no mention of cryptocurrencies in this announcement, as opposed to the announcement of the Signature Bank acquisition. Silicon Valley Bank (SVB) and the $20 billion bankruptcy cost In its announcement, the FDIC goes on to estimate the cost of the bank’s failure as follows: “The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership.” In this regard, there are those who commented on this figure, adding that this would be the most expensive bank failure in the US.  FDIC estimates that Silicon Valley Bank's failure will cost the deposit insurance fund $20B That'd make it the costliest bank failure in US history, beating IndyMac's '08 failure (which cost $12.4B) and eating 14% of the insurance fund, which comes from an assessment on banks. pic.twitter.com/kRwRuSIyL4 — Joey Politano (@JosephPolitano) March 27, 2023 And indeed, compared to Signature Bank’s estimated DIF cost of about $2.5 billion, SVB’s losses are significantly higher. First Citizens’ shares rise 50% The news of the bailout by First Citizen Bank & Trust Company made its FCNCA shares jump 50%.  Indeed, FCNCA shares rose on 27 March from $582.55 to an impressive $852.69 and have remained at that level. At the time of writing, First Citizens BancShares Inc shares are worth $895.61. The CEO of First Citizen, Frank B. Holding, commented on Twitter: “We are proud that the FDIC has selected First Citizens to take on the important relationships with Silicon Valley Bank’s depositors and customers, and in turn, strengthen the banking system and the U.S. economy." – Frank B. Holding, Jr. Read more: https://t.co/WK00OrcQY9 pic.twitter.com/qUxZQRo8pt — First Citizens Bank (@firstcitizens) March 27, 2023 Not only that, in his article, Holding describes the bank as follows: “First Citizens has a reputation for financial strength, exceptional customer service and prudent lending that spans 125 years. We have partnered with the FDIC to successfully complete more FDIC-assisted transactions since 2009 than any other bank, and we appreciate the confidence the FDIC has placed in us once again. We look forward to building relationships with our new customers and positioning our company for continued success as we affirm our commitment to support the integrity of our nation’s banking system.” Silicon Valley Bank (SVB) and the unresolved USDC case Speaking of cryptocurrencies, the present news finds no support for Circle’s stablecoin, USD Coin (USDC), which continues to lose market capitalization. In fact, since the collapse of SVB, USDC has been the only crypto to suffer an outflow on supply estimated at 3.9 billion. Not only that, USDC’s holders seem to have decided to abandon the idea that USDC was safe, despite the fact that Circle’s CEO had provided reassurance about the coin’s solvency. The thing is, Circle had declared the day after the bank’s fall that 3.3 billion of USDC reserves remained anchored in Silicon Valley Bank. That day marked the beginning of the decline in USDC’s market capitalization as well as its de-peg to the US dollar. Looking at the graph, as of 10 March 2023, USDC’s market cap of $43.55 billion began to decline day by day, reaching $33.42 billion today. USDC’s request to the Fed for help Last week, Circle asked the US Federal Reserve for help, asking them to support the USDC stablecoin with US dollars held at the Fed. A request that would bring back confidence about the stablecoin’s greater stability and security for its users who have been preferring other stablecoins, such as Tether (USDT), for over two weeks now. Basically, at the conference held at Warwick Business School, Circle vice president Tarleton Watkins discussed the potential long-term solution for retail stablecoins.  Watkins would suggest that a wholesale Central Bank Digital Currency (CBDC) at the Federal Reserve could be used as a back-up tool for stablecoins. This would be a more secure and stable option for users. Not only that, Watkins also advised stablecoin issuers to hold dollar reserves at the Fed, rather than relying on various financial partners.  
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Important news for the crypto company Tether, which says it has about $1.6 billion in excess reserves to support its USDT stablecoin. Speaking of which, Tether’s chief technology officer Paolo Ardoino believes USDT is becoming the safest asset to hold in the world during the banking crisis. Full details below. Crypto news for Tether regarding its reserves Crypto company Tether estimates it will make a $700 million profit in the March quarter, bringing its total excess reserves to more than $1 billion, the company’s chief technology officer told CNBC, revealing the latest data for the first time. As we know, Tether issues the USDT stablecoin, which is pegged one-to-one with the US dollar. The USDT is backed by real-world assets such as fiat currency and U.S. Treasuries, meaning that it is always redeemable one-to-one with the US dollar. Indeed, stablecoins are generally used by traders to enter and exit different cryptocurrencies without the need to convert money back into fiat currencies. However, over the years, stablecoin issuers have been criticized for not being transparent enough with the type of assets they hold in their reserve to back their digital currency. Tether held commercial paper, or short-term unsecured debt issued by companies, but apparently did not disclose the type of companies or the geographic location of the companies from which it had contracted debt. Eventually, Tether sold all its commercial holdings and moved into US Treasuries, which are considered a more stable and reliable asset. The company produces so-called attestations, which are reports produced by an auditor to attest to the company’s reserves and the assets it holds. The last report released by Tether, covering the December quarter, showed that it had more assets than liabilities. Tether company then revealed in February that it had made a profit of $700 million in the December quarter. Company’s total assets once liabilities were subtracted amounted to $960.6 million. Tether CTO’s statements on the latest crypto news Paolo Ardoino, chief technology officer of Tether, said the company estimates that excess reserves will increase by $700 million in the current quarter, which has not yet ended. This would bring Tether’s excess reserves to $1.66 billion and would also be the first time the company has crossed the $1 billion threshold. On this matter, Ardoino stated: “So this money stays in Tether, the main company, to further capitalize the stablecoin.” Tether generally makes money from various fees, such as the $1,000 withdrawal fee (with a minimum required withdrawal amount of $100,000), from investments in digital tokens and precious metals, and from issuing loans to other institutions. In addition, Ardoino said that in the fourth quarter of 2022, Tether generated $700 million in profits: “I don’t have the final data yet, but this quarter’s profit will probably correspond to the last quarter of 2022.” Not only that, he also added that the crypto company owns an additional sum on top of that $950 million. Specifically, he pointed out the following: “So, that means our company’s capital will grow to $1.5 billion or $1.7 billion that adds to the reserves that we have that back up 100% of the assets.” The Tether executive went on to say that USDT is becoming the safest asset to hold in the world because the company is different from banks based on the fractional reserve model. Not only that, Ardoino also specifically referred to the ongoing crisis in the US banking system, with banks such as Silicon Valley Bank (SVB) collapsing due to problems with the fractional reserve model. In this regard, he expressed his opinion by saying: “I love Bitcoin and that’s our cover, and that’s why we’re into Bitcoin, because we don’t trust those guys who have taken so much risk on customer deposits.” Tether and Circle compared after SVB’s collapse As previously reported, last year Tether aggressively cut its commercial paper support, eventually reducing it to zero by the end of 2022. In addition to removing commercial paper from its reserves, Tether was replacing those investments with US Treasury bonds. The news comes as Tether continues to increase its market dominance, with USDT’s market capitalization adding about $8 billion since 28 February, according to CoinGecko. In any case, the value of all outstanding USDT has grown significantly this month, from $70.98 billion on 1 March to $78.14 billion on Thursday, according to CoinMarketCap. However, Circle, which issues a rival stablecoin called USD Coin, faced big problems because of its exposure to the SVB collapse. With the USDC stablecoin briefly losing its 1:1 peg with the US dollar. Subsequently, the stablecoin bounced back as Circle announced Cross River as its new banking partner and expanded ties with BNY Mellon. However, after the US government intervened to guarantee depositors, USDC regained its peg. Specifically, its situation only recovered after it affirmed that the $3.3 billion USDC reserve deposit held at SVB will be fully available to people. In contrast, Ardoino revealed Tether’s estimated profit for the current quarter defending the company’s record. Indeed, when asked whether Tether would be able to withstand an event like the SVB crisis, Ardoino asked why people still question its reserves even after the collapse of traditional lenders. In addition, in reference to Credit Suisse’s instability, which eventually led to a $3.2 billion deal brokered by the regulator for UBS to buy the Swiss lender, Tether’s CTO said: “Tether is making money and the banks are failing. So if you have to put money somewhere, I guess Tether is the safest of all the choices.”  
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