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An Update on USDC and Silicon Valley Bank

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Re: An Update on USDC and Silicon Valley Bank

#3

Post by bb88 »

After the fall of Terra, it's clear that stablecoins can only go down in value. There's also no FDIC to step in to take over the failing stablecoin. You're trusting USDC and by extension BlackRock to do the right thing here.

If it's not a security than it's not regulated.

Re: An Update on USDC and Silicon Valley Bank

#6

Post by obblekk »

23% of the reserve, or $9.7B is held in cash.

I think on Thursday, SVB saw cash outflow requests over $40b in one day. USDC peg is so far below 1 right now there will definitely be a lot of par arbitrage Monday trying to withdraw.

Hopefully it doesn’t take longer than a day for them to settle treasury trades, and maybe some people have lost the keys to their crypto. They could also possibly have a line of credit with instant settlement assuming they’re truly solvent with marketable securities at market prices.

Re: An Update on USDC and Silicon Valley Bank

#8

Post by bhaak »

bb88 wrote: post #3

After the fall of Terra, it's clear that stablecoins can only go down in value. There's also no FDIC to step in to take over the failing stablecoin. You're trusting USDC and by extension BlackRock to do the right thing here. If it's not a security than it's not regulated.

Terra was no stablecoin and it has been constantly pointed out that it wasn't.

USDC is backed 1 USDC for 1 USD. What you're actually seeing here is that the traditional finance system has lead to a crash in crypto. That's almost refreshing. Usually crypto fucks up by itself (see FTX and Terra for the most recent ones).

Re: An Update on USDC and Silicon Valley Bank

#9

Post by incrudible »

bb88 wrote: post #3

After the fall of Terra, it's clear that stablecoins can only go down in value. There's also no FDIC to step in to take over the failing stablecoin. You're trusting USDC and by extension BlackRock to do the right thing here. If it's not a security than it's not regulated.

Terra was collateralized by crypto. USDT is collateralized by… something, maybe. Given that USDT always regained its peg regardless, the depeg of USDC seems like an overreaction.
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