First Mover Americas: Bitcoin Gains as FDIC Steps In for Silicon Valley Bank

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Risky assets pared or reversed early gains during the European trading hours as shares in San Francisco-based First Republic Bank (FRC) nosedived in premarket trading in the U.S., reflecting investor angst over the banking sector's health. Bitcoin pulled back to $22,000, after it nearly tested its 50-day simple moving average at $22,900 during Asian daytime hours. The cryptocurrency is still up 8% in the last 24 hour as the Federal Deposit Insurance Corp. said all depositors of Silicon Valley Bank will have full access to their money beginning Monday morning. after confirming a successful transfer of deposits to a new bridge bank. The new bridge bank, called Silicon Valley Bank N.A., will be operated by the FDIC. Silicon Valley Bank is used by many tech companies, an area that includes crypto startups.

The cryptocurrency crisis went into high gear over the weekend as Silicon Valley Bank's failure caused some of the industry's core plumbing to go haywire. Stablecoin prices wildly swung and gas fees soared as investors scrambled to move money around hours after regulators shut SVB amid a run on the bank, which had ties to crypto. Circle Internet Financial's USDC stablecoin massively depegged from its intended $1 price – a harrowing development for a product designed as a place for investors to safely park money. The USDC/USDT pair sank as low as 87 cents on Saturday. It has since bounced back to 99 cents. The financial-services company confirmed late Friday that about $3.3 billion of the reserves backing the world's second-largest stablecoin was tied up at SVB.

HSBC U.K. Bank is acquiring Silicon Valley Bank U.K. for 1 British pound, or the equivalent of $1.21, according to a filing Monday with the London Stock Exchange. As of Friday, SVB U.K. had loans of around $6.6 billion and deposits of around $8.1 billion, the filing read. "This acquisition makes excellent strategic sense for our business in the U.K.," HSBC (HSBC) CEO Noel Quinn said. "It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the U.K. and internationally."

Chart of the Day

• The chart shows tether, the world's largest dollar-pegged cryptocurrency, trading at a premium on major exchanges ever since USDC issuer Circle Internet Financial confirmed holding more than $3 billion in cash at crisis-stricken Silicon Valley Bank.
• The premium reflects investor preference for USDT over USDC, which fell into a discount over the weekend.

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