Analysis Daily TheBitTimes.com

Did the depegging reveal stablecoins’ limitations, or was it a learning moment? USD Coin (USDC), the world’s second-largest stablecoin, may simply have been in the wrong place at the wrong time.  The place was Silicon Valley Bank (SVB), a commercial bank with $209 billion in assets, where USDC issuer Circle had deposited $3.3 billion of its cash reserves for safekeeping. The time was the present: one of rapidly rising interest rates in which institutions like SVB, which had long been gathering short-term deposits to buy long-term assets, got whipsawed. For several harrowing days, USDC lost its peg to the U.S. dollar, sinking to as low as $0.85 (depending on the exchange) before recovering to $1.00 on Monday, March 13. This was the coin that many considered to be the poster child for fiat-based stablecoins, i.e., the most transparent, compliant and frequently audited. An unpredictable turn of events? “It’s ironic that what was supposed to be the safest place to put stablecoin reserve...

In our latest Cointelegraph Report, we broke down the main events that led to the collapse of Silvergate, SVB and Signature Bank and explain what this all could mean for crypto. Last week’s rapid collapse of Silvergate, Silicon Vallley Bank and Signature Bank have highlighted the fragility of the traditional banking sector while depriving crypto of the main fiat on-ramp points in the U.S.  Most observers agree that the collapse of SVB, like the one of Silvergate, was largely the result of unfavourable market conditions and poor risk management.  The shutdown of Signature was more controversial. According to multiple sources, the bank was not facing insolvency and had largely stabilized its capital outflow when U.S. regulators decided take over it last Sunday. Many in the crypto industry saw it as a political decision, aimed at pushing crypto out of the U.S. Silvergate and Signature were the two main financial institutions providing Banking services to crypto companies in the US: fol...