Circle and Sequoia Capital were among the top depositors at Silicon Valley Bank (SVB) before its collapse, according to a recent report by Bloomberg.
Other significant depositors included SVB itself, SVB Financial Group, Altos Labs, a biotechnology research company, and Kanzhun, a China-based firm.
Documents provided by the Federal Deposit Insurance Corporation (FDIC) indicated that Circle, Sequoia, and other depositors had billions of dollars covered.
This was an exception to the usual FDIC insurance limit of $250,000 per depositor. In response to the collapse of SVB, the Federal Reserve announced its collaboration with the FDIC to compensate insured and uninsured depositors.
Circle, a stablecoin issuer, held approximately $3.3 billion in deposits, while Sequoia Capital had around $1 billion.
The failure of SVB and subsequent collapses of Signature Bank and First Republic Bank have drawn attention to how deposit insurance is handled by regulators in the United States.
The Fed, FDIC, and Treasury Department deemed the coverage of SVB and Signature deposits over $250,000 as a “systemic risk exception” but are said to be considering an increase in the insurance limit.
Following SVB’s collapse in March and Circle’s confirmation of approximately $3.3 billion exposure to the bank, the value of its stablecoin, USD Coin, briefly deviated from the U.S. dollar.
However, Circle has since announced its plans to launch a native version of USDC on the Arbitrum network in June. This move aims to strengthen the stability and accessibility of its stablecoin.
The events surrounding SVB’s collapse have highlighted the importance of regulatory oversight and insurance in the cryptocurrency and banking sectors.
As the industry continues to evolve, discussions about risk management and investor protection are likely to shape future regulatory frameworks.
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