Stablecoin issuer Circle and venture capital firm Sequoia Capital were reportedly among the top 10 depositors at the collapsed crypto-friendly Silicon Valley Bank (SVB) in March.
According to a June 23 report from Bloomberg, the Federal Deposit Insurance Corporation (FDIC) provided documents suggesting that Circle, Sequoia and others were covered for deposits in the billions of dollars. The Federal Reserve announced following the SVB collapse that it would work with the FDIC to make both insured and uninsured depositors whole — in most situations, the FDIC only insures up to $250,000 per depositor.
Circle reportedly held roughly $3.3 billion in deposits, while Sequoia had roughly $1 billion. Other major depositors included Silicon Valley Bank itself, SVB Financial Group, biotechnology research firm Altos Labs and Kanzhun Limited, a China-based company behind a major online recruitment platform.
— Joe Weisenthal (@TheStalwart) June 23, 2023
The failure of SVB and the subsequent collapses of Signature Bank and First Republic Bank has put a spotlight on how regulators in the United States handle deposit insurance. Though the Fed, FDIC and Treasury Department said covering SVB and Signature deposits of more than $250,000 was part of a “systemic risk exception,” they have reportedly explored raising the insurance limit.
Following the failure of SVB in March and Circle confirming it had roughly $3.3 billion in exposure to the bank, the firm’s USD Coin (USDC) briefly depegged from the U.S. dollar. In June, the stablecoin issuer announced it planned to launch a native version of USDC on the Arbitrum network.