- The Federal Reserve Board announced that it will lead a review of its own supervision of Silicon Valley Bank (SVB).
- Two blockchain firms held funds with SVB: Circle and BlockFi.
- The FDIC said on March 13 that it will move all user assets to a bridge bank so that users can access those funds.
Federal Reserve to Reexamine Oversight of Silicon Valley Bank
The Federal Reserve Board has announced a review into its own oversight of Silicon Valley Bank following the bank’s collapse. Vice Chair for Supervision Michael S. Barr will lead the review, which is due by May 1. Chairman Jerome H. Powell also commented on the need for „thorough, transparent, and swift“ examination from the agency.
Circle & BlockFi Had Funds With SVB
Though Silicon Valley Bank did not primarily serve crypto companies, stablecoin issuer Circle had $3.3 billion in reserves with SVB and lending firm BlockFi had $227 million with the bank. The news led USD Coin (USDC) to lose its peg with the dollar this weekend. However, Circle was able to access its funds and USDC is now back at $1.00 value.
FDIC Moving Assets To Bridge Bank
The Federal Deposit Insurance Corporation (FDIC), which initially closed the bank on March 10 and said that it would act as receiver, plans to move all user assets to a bridge bank so they can access them again soon. The FDIC may also attempt to re-auction Silicon Valley Bank in order to further recovery efforts.
Better Markets Suggests Independent Investigator
Industry watchdog Better Markets has suggested that an independent investigator should be appointed instead of allowing the Federal Reserve to review its own activities in this situation. However, any actions taken will not directly affect investors since it is not the Federal Reserve’s responsibility at this point to handle SVB’s failure — that duty falls with the FDIC instead.
The collapse of SVB was preceded by Silivergate Bank’s failure on March 9th, and highlights both the importance of proper regulation as well as financial institutions being prepared for potential losses or mismanagement in volatile business environments such as cryptocurrency markets today