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Panic is contagious. The real risk to any bank these days seems to be a Crypto affiliation. Fatal Bank runs happen if you have a group of people who talk to eac

by dzink 4y ago

Panic is contagious. The real risk to any bank these days seems to be a Crypto affiliation. Fatal Bank runs happen if you have a group of people who talk to each other and have a large % of holdings in the bank (so sudden pull of those holdings ends up putting the bank under liquidity thresholds). Circle has the biggest or one of the biggest accounts in SVB and the stable-coin run or another factor made them rebalance. VCs, another large connected cluster at SVB got wind of it, and drained the rest. First Republic has VC exposure but not to Circle. There are 5 other banks that are affiliated with Circle and if any of them are struggling with underwater bonds, that would be a big problem. There are a lot of interest-rates-weakened non-crypto affiliated banks in the US, but their deposits are mostly under the FDIC threshold. SVB had the worst vin diagram of all: Crypto, large average deposits, and very inter-connected client base.

dehrmann 4y ago
The SVB run was unrelated to crypto, other than that VCs also invest in crypto startups. We're also past the point of a group of people talking to each other about bank risk; now everyone's looking at it.
TacticalCoder 4y ago
> The real risk to any bank these days seems to be a Crypto affiliation. Maybe. Meanwhile the second biggest bank failure in the history in the US is undergoing and it has nothing to do with crypto. > Circle has the biggest or one of the biggest accounts in SVB and the stable-coin run or another factor made them rebalance. It's Circle's fault now? > There are 5 other banks that are affiliated with Circle and if any of them are struggling with underwater bonds, that would be a big problem. Circle, unless they're lying, said they have $5.4 bn at BNY. $3.3 at SIVB and the rest over the 5 other banks. So out of $9.8 bn in USD cash reserves, there is at most $1.1 bn left, spread over 5 banks. I don't think it's a problem as big as you pretend it is. I also think it's an argument made in very bad faith that Circle is responsible for this. SIVB had, at one point, $200 bn AuM. $3.3 bn is not nothing but it's not much compared to $200 bn.
- dzink 4y ago
  In the Circle press announcement they shared that last week, prior to the collapse, they moved several billion into BNY Mellon, and 3.3 remained at SVB. They didn’t say if they removed them FROM SVB to put them into BNY but they didn’t say they didn’t either and the “remained” leads to that assumption. They had pulled assets from Silvergate as well and then Silvergate collapsed, but they have no exposure to it. That tells you that Circle with its gigantic accounts may have realized the banks are vulnerable, pulled its money out (or been forced to by crypto investors cashing in their USDC), and that money is a disproportionately large share of the liquidity those banks were holding. When SVB was shuttered it was underwater by slightly less than a billion. Circle is not to blame, as they did what they probably had to do, but the size of Circle’s accounts would probably bring down most banks in these conditions. The banks partnering with large crypto whales in a high interest rate environment are likely in deep trouble. SVB was the perfect bank for startups, but its appetite for crypto and poor risk management likely caused the collapse. https://www.circle.com/blog/an-update-on-usdc-and-silicon-valley-bank?fbclid=IwAR1t3tRrUeMuGg-DD_6YzWirgPoDmzKIQ96P6PmZp8Rt9t4u82Z-kgNl6xQ https://www.circle.com/blog/an-update-on-usdc-and-silicon-va...
  - dzink 4y ago
    The full list of banks that held cash for Circle’s USDC are Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank (a division of Flagstar Bank, N.A.), Signature Bank, Silicon Valley Bank and Silvergate Bank. Circle also keeps some part of USDC reserves in a dedicated BlackRock fund. Circle said last week it had cut ties with Silvergate Bank, the crypto-friendly bank that halted operations and said it would “voluntarily liquidate” its assets earlier this week. https://www.coindesk.com/markets/2023/03/10/scrutiny-falls-on-43b-usdc-stablecoins-cash-reserves-at-failed-silicon-valley-bank/ https://www.coindesk.com/markets/2023/03/10/scrutiny-falls-o...
lordfrito 4y ago
Bitcoin solves this. Few understand. /s

by dzink 4y ago

dehrmann 4y ago

The SVB run was unrelated to crypto, other than that VCs also invest in crypto startups. We're also past the point of a group of people talking to each other about bank risk; now everyone's looking at it.

TacticalCoder 4y ago

> The real risk to any bank these days seems to be a Crypto affiliation. Maybe. Meanwhile the second biggest bank failure in the history in the US is undergoing and it has nothing to do with crypto. > Circle has the biggest or one of the biggest accounts in SVB and the stable-coin run or another factor made them rebalance. It's Circle's fault now? > There are 5 other banks that are affiliated with Circle and if any of them are struggling with underwater bonds, that would be a big problem. Circle, unless they're lying, said they have $5.4 bn at BNY. $3.3 at SIVB and the rest over the 5 other banks. So out of $9.8 bn in USD cash reserves, there is at most $1.1 bn left, spread over 5 banks. I don't think it's a problem as big as you pretend it is. I also think it's an argument made in very bad faith that Circle is responsible for this. SIVB had, at one point, $200 bn AuM. $3.3 bn is not nothing but it's not much compared to $200 bn.

dzink 4y ago
In the Circle press announcement they shared that last week, prior to the collapse, they moved several billion into BNY Mellon, and 3.3 remained at SVB. They didn’t say if they removed them FROM SVB to put them into BNY but they didn’t say they didn’t either and the “remained” leads to that assumption. They had pulled assets from Silvergate as well and then Silvergate collapsed, but they have no exposure to it. That tells you that Circle with its gigantic accounts may have realized the banks are vulnerable, pulled its money out (or been forced to by crypto investors cashing in their USDC), and that money is a disproportionately large share of the liquidity those banks were holding. When SVB was shuttered it was underwater by slightly less than a billion. Circle is not to blame, as they did what they probably had to do, but the size of Circle’s accounts would probably bring down most banks in these conditions. The banks partnering with large crypto whales in a high interest rate environment are likely in deep trouble. SVB was the perfect bank for startups, but its appetite for crypto and poor risk management likely caused the collapse. https://www.circle.com/blog/an-update-on-usdc-and-silicon-valley-bank?fbclid=IwAR1t3tRrUeMuGg-DD_6YzWirgPoDmzKIQ96P6PmZp8Rt9t4u82Z-kgNl6xQ https://www.circle.com/blog/an-update-on-usdc-and-silicon-va...
- dzink 4y ago
  The full list of banks that held cash for Circle’s USDC are Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank (a division of Flagstar Bank, N.A.), Signature Bank, Silicon Valley Bank and Silvergate Bank. Circle also keeps some part of USDC reserves in a dedicated BlackRock fund. Circle said last week it had cut ties with Silvergate Bank, the crypto-friendly bank that halted operations and said it would “voluntarily liquidate” its assets earlier this week. https://www.coindesk.com/markets/2023/03/10/scrutiny-falls-on-43b-usdc-stablecoins-cash-reserves-at-failed-silicon-valley-bank/ https://www.coindesk.com/markets/2023/03/10/scrutiny-falls-o...

lordfrito 4y ago

Bitcoin solves this. Few understand. /s