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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

#41

Post by JumpCrisscross »

rekttrader wrote: post #21
optimalsolver wrote: post #2

>Moreover, SVB has a strong franchise that is at the center of American entrepreneurship and technology industry growth. Tl:Dr: Save us, Big Government.

That’s a cheap shot, does roku deserve a 470+m haircut?

> does roku deserve a 470+m haircut

Yes. Public company CFOs should not have this level of non-AAA counterparty risk concentration. (SVB were A1 and Baa1 [1] / A+ and BBB+ [2].)

[1] https://money.usnews.com/investing/news/articles/2023-03-10/...

[2] https://wolfstreet.com/credit-rating-scales-by-moodys-sp-and...

Re: An Update on USDC and Silicon Valley Bank

#42

Post by tempsy »

obblekk wrote: post #6

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…

how is it “so far below”

it’s recovered to less than a 4% discount

Re: An Update on USDC and Silicon Valley Bank

#43

Post by wmf »

everybodyknows wrote: post #16
tekla wrote: post #5

What they don't bring up. The peg is a lie, hit $0.87. https://www.cnbc.com/2023/03/11/stablecoin-usdc-breaks-dolla...

What if anything does this mean then? FTA: >As a regulated payment token, USDC will remain redeemable 1 for 1 with the U.S. Dollar.

As the article says, it's redeemable within banking hours not on the weekend.

Re: An Update on USDC and Silicon Valley Bank

#44

Post by bhaak »

bb88 wrote: post #25
bhaak wrote: post #8

Earlier quoted context omitted.

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).

What's their balance sheet at the moment assuming 8% of cash is missing? Is it still 1:1 or 1:.94? Also coindesk says TerraUSD is a stablecoin. https://www.coindesk.com/price/terrausd/ Washington Post too: https://www.washingtonpost.com/business/what-are-stablecoins... Also Gemini says it as well: https://www.gemini.com/en-us/prices/terrausd-ethereum

Their balance sheet is still 1:1 as the 8% at SBV has not yet been written off.

The market reacts faster of course but the market has no crystal ball. It can't predict what's going to happen.

Re: An Update on USDC and Silicon Valley Bank

#45

Post by WalterSear »

bb88 wrote: post #24
obblekk wrote: post #6

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…

Can one short USDC with leverage?

Short? I can't see this not returning to it's peg by the next news cycle. It's free money.

SVB went bankrupt - as a business: it can't pay its bills. People are reacting to this as if the deposits have vanished entirely.

If you think USDC is a shorting opportunity, short anything crypto. USDC is literally the second largest domino.

Re: An Update on USDC and Silicon Valley Bank

#46

Post by bhaak »

echelon wrote: post #29
obblekk wrote: post #6

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…

The creators of USDC could destroy their own coins to restore the 1:1 reserve peg. I doubt they'd do it, but it would immediately restore confidence. Send them to a null address or commit to burning them in software. If they can restore the reserve, they could remint them. I'm a crypto bear (with modest crypto holdings for diversification), and I think this is an opportunity for these folks to step up to the plate an…

> The creators of USDC could destroy their own coins to restore the 1:1 reserve peg. I doubt they'd do it, but it would immediately restore confidence.

Why should they? USDC is not an algorithmic stablecoin. For once, it's actually not a failure in crypto that lead to this depeg.

I'm not even sure they are allowed to do it by their own contracts with their clients as long as it is not clear that the USD at SBV is really lost.

Re: An Update on USDC and Silicon Valley Bank

#47

Post by chejazi »

JumpCrisscross wrote: post #34
bhaak wrote: post #8

Earlier quoted context omitted.

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).

> USDC is backed 1 USDC for 1 USD It’s at least 87¢ and 23¢ of priority unsecured claims on a bank in receivership.

I assume you're deriving the 23¢ from the 23% they have banked, but I would like to note that of that 23%, roughly a third (3.3bn of 9.7bn) was with SVB. The rest was with other banks not facing the same issue.

Re: An Update on USDC and Silicon Valley Bank

#48

Post by darcys22 »

JumpCrisscross wrote: post #37
darcys22 wrote: post #13

Earlier quoted context omitted.

They deposited 3B with this bank for the specific purpose of it being a safe place. Their 10B in cash was spread over 6 banks to diversify the bank risk. They have plenty of higher risk investments in their treasury, but these ones were the safe ones intentionally put into banks with insurance. If the government protection wasn't there the investment would’t have been there in the first place

> 10B in cash was spread over 6 banks to diversify the bank risk This is nonsense Treasury management. Fidelity spreads checking account deposits across twenty-six banks to reach $3mm FDIC coverage [1]. Beyond sweep, Circle’s assets should be in short-term, on-the-run Treasuries, repos and commercial paper. [1] https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBa...

They do hold 32B in short term treasury bills though

https://www.blackrock.com/cash/en-us/products/329365/

These funds appear to be specifically for short term redemptions, if they turn over 3B in redemption's every 7 days then how are they meant to keep less then that in the banks

Re: An Update on USDC and Silicon Valley Bank

#50

Post by VagueMag »

JumpCrisscross wrote: post #41
rekttrader wrote: post #21

Earlier quoted context omitted.

That’s a cheap shot, does roku deserve a 470+m haircut?

> does roku deserve a 470+m haircut Yes. Public company CFOs should not have this level of non-AAA counterparty risk concentration. (SVB were A1 and Baa1 [1] / A+ and BBB+ [2].) [1] https://money.usnews.com/investing/news/articles/2023-03-10/... [2] https://wolfstreet.com/credit-rating-scales-by-moodys-sp-and...

I would like to know how I can get the $400K/year corporate treasurer job that's just "park all the money in a single bank account with no insurance."
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