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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

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

benatkin 4y ago
But the insurance doesn't apply to the full amount.
- oldgradstudent 4y ago
  The insurance is negligible for them.
  - benatkin 4y ago
    Hence the government protection should be partial. Mostly just making sure SVB's assets are used to lessen the impact of the closure. If that results in Circle getting pennies on the dollar then so be it.
    - oldgradstudent 4y ago
      > Mostly just making sure SVB's assets are used to lessen the impact of the closure That's standard practice. Money from liquidation goes first to insured deposits, then what remains goes to uninsured deposits, then to pay other debts, and finally if anything is left, to shareholders. Looks like here it will only cover insured deposits and substantial fraction of uninsured deposits.
      - benatkin 4y ago
        Yeah, some think that substantial fraction will be 100%. We'll see! I don't want to give Circle one cent of bailout money, though. And their post is saying that they are owed a full bailout because they participated in the bank run on the day of the bank run, and also begging for a full bailout. Pretty pathetic.
        humanizersequel 4y ago
        >And their post is saying that they are owed a full bailout because they participated in the bank run on the day of the bank run, and also begging for a full bailout. Where in this post does it say that?
        benatkin 4y ago
        The part where they participated in the bank run: > $3.3bn of USDC’s cash reserves remain with SVB. As of Thursday, we had initiated transfers of these funds to other banking partners. Though these transfers had not yet been settled as of close of business Friday, we remain confident in the FDIC’s management of the SVB situation and stand ready to receive these funds. The part where they said that because they participated in the bank run that they should keep it all, presumably even if others who didn't participate in the bank run lose some of theirs: > We have reason to believe that under applicable FDIC policy, transfers initiated prior to a bank entering receivership would have otherwise been processed normally. In other words, the FDIC should allow transactions to settle in the ordinary course through the end of a bank’s standard daily processing cycle until the FDIC takes control of the failed institution. "transfers initiated prior to a bank entering receivership" is doing a lot of work here.
JumpCrisscross 4y ago
> 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/fdicBankList?type=fcma https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBa...
- darcys22 4y ago
  They do hold 32B in short term treasury bills though https://www.blackrock.com/cash/en-us/products/329365/ 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

benatkin 4y ago

But the insurance doesn't apply to the full amount.

oldgradstudent 4y ago
The insurance is negligible for them.
- benatkin 4y ago
  Hence the government protection should be partial. Mostly just making sure SVB's assets are used to lessen the impact of the closure. If that results in Circle getting pennies on the dollar then so be it.
  - oldgradstudent 4y ago
    > Mostly just making sure SVB's assets are used to lessen the impact of the closure That's standard practice. Money from liquidation goes first to insured deposits, then what remains goes to uninsured deposits, then to pay other debts, and finally if anything is left, to shareholders. Looks like here it will only cover insured deposits and substantial fraction of uninsured deposits.
    - benatkin 4y ago
      Yeah, some think that substantial fraction will be 100%. We'll see! I don't want to give Circle one cent of bailout money, though. And their post is saying that they are owed a full bailout because they participated in the bank run on the day of the bank run, and also begging for a full bailout. Pretty pathetic.
      - humanizersequel 4y ago
        >And their post is saying that they are owed a full bailout because they participated in the bank run on the day of the bank run, and also begging for a full bailout. Where in this post does it say that?
        benatkin 4y ago
        The part where they participated in the bank run: > $3.3bn of USDC’s cash reserves remain with SVB. As of Thursday, we had initiated transfers of these funds to other banking partners. Though these transfers had not yet been settled as of close of business Friday, we remain confident in the FDIC’s management of the SVB situation and stand ready to receive these funds. The part where they said that because they participated in the bank run that they should keep it all, presumably even if others who didn't participate in the bank run lose some of theirs: > We have reason to believe that under applicable FDIC policy, transfers initiated prior to a bank entering receivership would have otherwise been processed normally. In other words, the FDIC should allow transactions to settle in the ordinary course through the end of a bank’s standard daily processing cycle until the FDIC takes control of the failed institution. "transfers initiated prior to a bank entering receivership" is doing a lot of work here.

JumpCrisscross 4y ago

> 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/fdicBankList?type=fcma https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBa...

darcys22 4y ago
They do hold 32B in short term treasury bills though https://www.blackrock.com/cash/en-us/products/329365/ 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