According to a March 11 post by Unlimited Funds chief investment officer Bob Elliot, the relief effort could be underway less than 72 hours after the collapse of America’s leading tech bank Silicon Valley Bank (SVB). Among other things, Elliot claimed that “major banks are actively working to buy SVB business,” the US Federal Deposit Insurance Corporation (FDIC) plans to insure 95% of uninsured depositors against the acquirer, and that “50 percent of uninsured depositors as be paid next where.”
Cointelegraph reported earlier today that Circle, the issuer of stablecoin USD Coin (USDC), had over $3.3 billion in reserves out of a total of over $40 billion in the troubled bank. Additionally, SVB reportedly held an estimated $5 billion in funds for well-known blockchain venture capital firms such as a16z, Pantera Capital, and Paradigm. Earlier today, the USDC broke from its one-to-one peg to the US dollar, trading as low as $0.87 apiece before slowly reconsolidating to $0.95 at the time of publication.
Although the reports are currently unverified, multiple sources confirm that many different avenues of resolution are being worked on and that depositors will recover “at least 50% of their deposits” by next week. “Over the long term, they’re likely to get back more than 90%, and there’s a very good chance that no depositor will lose a single dollar,” said Hal Press, founder of investment firm North Rock LP.
Also on the same day, Mike Moïse, associate director and associate director of management consulting firm CrossCountry Consulting, citing secondary sources:
“SVB customers will have $250,000 on Monday and ~50% of the remaining balance will be paid out to depositors within 1-2 days after Monday (money market accounts are likely to receive 100%). The rest will depend on future returns; most recovery occurs within 3-6 months.”
Previously, DeFi analyst Loki Zeng estimated USDC’s net worth to be “$0.885 in extreme situations and $0.985 in normal situations,” commenting, “Even if there is a problem, it won’t be as severe as FTX. Alex Svanevik, CEO of blockchain analytics firm Nansen, also said that the Circle and USDC “can do it” as long as there is “first class execution” in the next few days. Similar to USDC, the DAI stablecoin, itself collateralized with over $3.1 billion USDC, has recouped most of its losses and is trading at $0.97 per coin at press time. Maker DAO, the issuer of DAI, earlier today submitted an emergency proposal to change protocol risk parameters in the wake of the USDC depegging event.
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