US Authorities Consider Safeguarding Uninsured Deposits at Silicon Valley Bank, While Bitcoin Surges Amidst Panic in the Financial System

US federal authorities are reportedly considering safeguarding all uninsured deposits at Silicon Valley Bank in a bid to prevent a panic in the financial system. The move comes as Americans realise that bank accounts, including corporate accounts, are only insured up to $250,000 by the FDIC. The news coincides with a sharp reversal in the price of Bitcoin, which has soared from a 24-hour low of $20,334 to a high of $22,511, an 10.15% increase.

The creator of Bitcoin, Satoshi Nakamoto, created cryptocurrency as a response and alternative to the modern banking system. In creating the world’s first cryptocurrency, Nakamoto aimed to create a monetary system with an inherently scarce supply backed by a transparent and verifiable means of processing and validating transactions without the need for a bank or middleman.

However, the crypto industry is facing its own problems with the banking system after the collapse of crypto-friendly bank Silvergate, which cited regulatory pressures and "recent industry developments" as the reason for its closure. Silvergate's shutdown sparked last week's downturn in the crypto markets, and the fall of Silicon Valley Bank had direct consequences on the industry as well.

Circle, the company behind the stablecoin USDC, revealed it has $3bn of its $40bn in reserves at Silicon Valley Bank. The disclosure led to a crash in the price of USDC, which dropped to as low as $0.84 and is now trading at $0.98.


The CEO of the world's largest crypto exchange by volume, Changpeng Zhao, warns that any stablecoin tied to the banking system could face similar problems in the future.