The cryptocurrency market has had a positive change after the news that the US government will support the rescue of Silicon Valley Bank.
On the morning of March 13, the US Federal Reserve (Fed) held a sudden closed-door meeting. The federal government then launched a term funding program (BTFP) for troubled depository institutions, to meet the needs of all depositors.
@federalreserve announces Bank Term Funding Program (BTFP) to support American businesses and households, assure banks have the ability to meet needs of all their depositors: https://t.co/JIMjkooIDV
— Federal Reserve (@federalreserve) March 12, 2023
According to sources from Washington Postthe US federal government is considering bailing out uninsured deposits at Silicon Valley Bank, in case a buyout unit cannot be found. America’s 16th largest commercial bank collapsed this week.
The Treasury Department will also “set aside $25 billion from the Exchange Stabilization Fund” for the Fed’s program. Even so, the Fed does not expect to use it.
Sheet Bloomberg The FDIC and the Federal Reserve are considering creating a special fund to secure deposits at troubled banks following SVB’s bankruptcy. The source said regulators are discussing the measure with bank leaders and hope to set up a fund to reassure customers and reduce panic.
After the above news, the green color has returned to the financial market and the cryptocurrency industry. BTC price rallied to the $22,600 mark, before dropping slightly to the current price zone.
Besides, a series of stablecoins such as BUSD, USDC, DAI… have all recovered peg. The stablecoin that is suffering the most, USDC, has also returned to $ 0.99.
As Kyptos reported, SVB – one of the most prominent lenders in the tech startup world in Silicon Valley and the largest bank to close since the 2008 financial crisis, because of the capital crunch and the wave of fleeing from investors.
Silicon Valley Bank has been handed over to The Federal Deposit Insurance Corporation (FDIC) takes over, liquidates assets and reimburses SVB depositors and creditors. According to the agency, only insured deposits of $250,000 or less can customers get 100% back on March 14.
The FDIC is also aggressively selling SVB’s assets and seeking to pay off uninsured deposits to customers. Notably, most deposits at this bank are not FDIC insured.