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“Tim Draper’s Bitcoin Diversification Advice”

by Blockchain NewsMarch 26, 2023

American venture capitalist and entrepreneur Tim Draper has advised business founders to diversify their cash holdings in the wake of the collapse of Silicon Valley Bank (SVB). In a report directed at business founders, Draper suggests that Bitcoin and other cryptocurrencies can serve as a hedge against a “domino run” on banks and overbearing government intervention. He notes that businesses can no longer rely on a single bank or governing body to manage their cash, and that diversification is essential.

To that end, Draper recommends that business founders keep at least six months of short-term cash in two separate bank accounts: one with a local bank and another with an international bank. In addition, he advises keeping at least two payrolls worth of cash in Bitcoin and other cryptocurrencies. Draper believes that these preventative steps are necessary because, for the “first time in many years,” governments are seizing control of banks, and governments themselves are “at risk of becoming insolvent.”

Draper’s advice comes at a time when the collapse of SVB has caused significant uncertainty in the tech industry. SVB, which was once known for its support of startup companies, has recently faced a number of challenges, including a significant data breach and an investigation into its lending practices. This has left many startups scrambling to find alternative sources of funding and cash management solutions.

According to Draper, many startups have already sought emergency relief from him after SVB and other banks shut down. He believes that the collapse of SVB serves as a warning to businesses that they need to be prepared for any eventuality. By diversifying their cash holdings and embracing cryptocurrencies like Bitcoin, businesses can ensure that they are not overly reliant on any one institution or government.

Draper has long been an advocate for Bitcoin and cryptocurrencies, and his recent advice to business founders reflects his belief that these digital assets are the future of finance. He has previously predicted that the price of Bitcoin could reach $250,000 by 2023, and he has invested heavily in a number of Bitcoin-related startups.

Overall, Draper’s advice serves as a reminder to businesses that they need to be proactive in managing their cash holdings and prepared for any eventuality. By diversifying their cash holdings and embracing cryptocurrencies, businesses can protect themselves against the uncertainty and volatility of the current financial landscape.

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Binance converts remaining $1 billion in Industry Recovery Initiative to native crypto amidst concerns around stablecoins

by Blockchain NewsMarch 13, 2023

On March 13, CZ tweeted that due to the changes in stablecoins and banks, Binance will be converting the remaining $1 billion funds in its Industry Recovery Initiative to native crypto. The native cryptocurrencies listed by CZ included Bitcoin (BTC), BNB (BNB), and Ether (ETH). He also posted links to the hash ID for the BTC and ETH transactions, revealing that $980 million took 15 seconds to move with a $1.98 transaction fee.

However, the decision by the Binance co-founder to sell the Binance USD (BUSD) stablecoin and convert the fund to more “volatile” assets received mixed reactions on Crypto Twitter. Some praised the decision, while others questioned the move to sell stablecoins and convert the fund to more volatile assets.

The depegging of the USDC stablecoin was caused by the failure of three major crypto-friendly banks – Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank. Circle, the company behind USDC, disclosed on March 10 that it had around $3.3 billion tied up at SVB. This caused the USDC stablecoin to fall to as low as $0.87 from its $1 peg. However, by March 13, USDC had bounced back towards its $1 peg and is currently hovering around $0.99. Circle also has an undisclosed amount of reserve funds stuck in Silvergate, another US-based crypto-friendly bank that went bankrupt.

The instability surrounding USDC caused a domino effect on other stablecoins such as Dai (DAI), USDD, and FRAX, which also slipped from their $1 peg. Since the events began unfolding on March 10, the crypto space has been on edge as to what will happen next. Twitter users have claimed that there is “nobody left to bank crypto companies.”

This recent event highlights the concerns surrounding stablecoins and the reliance of the crypto industry on traditional banking systems. As a result, some experts are suggesting the need for a decentralized banking system that is not reliant on centralized entities such as banks. In the meantime, it remains to be seen how stablecoins and the crypto industry will adapt to these challenges and uncertainties.

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Tagged : Binance / News / Signature Bank / Silvergate Bank / Stablecoins / SVB / USDC

Circle’s USDC Reserve Exposure and Potential Risks

by Blockchain NewsMarch 11, 2023

Circle is one of the largest issuers of stablecoins, with USDC being the second-largest stablecoin in circulation. As of January 31, 2022, the circulating supply of USDC was $42 billion. Stablecoins are digital currencies that are pegged to a stable asset, such as the US dollar, to reduce volatility. They are widely used in the cryptocurrency market for trading, remittances, and other financial activities.

To maintain the stability of USDC, Circle holds reserves in cash and US Treasurys, which are managed by BlackRock through the Circle Reserve Fund. According to the latest audit report, nearly 20% of Circle’s reserves, or $8.6 billion, were held in cash by US regulated financial institutions as of January 31. The rest of the reserves, or $33.6 billion, were held in US Treasurys managed by BlackRock.

While Circle’s reserves are held by several regulated financial institutions, the recent shutdown of SVB and the decision of Silvergate to shut down its crypto bank arm have raised concerns about potential risks for Circle and its stablecoin. SVB is one of the biggest lenders in the US and a major player for venture-backed companies, including many tech firms. The shutdown of SVB has fueled fears about its future and the potential impact on the companies it serves.

According to Weisberger, a blockchain and cryptocurrency consultant, many tech firms, including startups and big tech companies, have deep exposure to SVB. If the government does not step in and effectively carry out a bailout of some sort, these companies could struggle to pay their employees, leading to layoffs and rising unemployment.

In the case of Silvergate, the company’s decision to shut down its crypto bank arm has raised concerns about the stability of its operations and its ability to repay its depositors. However, Circle has denied having any current exposure to Silvergate and has transferred the small percentage of USDC reserve deposits held to other banking partners.

In conclusion, while Circle’s reserves are held by several regulated financial institutions, recent events such as the shutdown of SVB and the decision of Silvergate to shut down its crypto bank arm have raised concerns about potential risks for Circle and its stablecoin USDC. The cryptocurrency market is still largely unregulated, and the stability of stablecoins depends on the stability of the assets they are pegged to and the institutions holding their reserves. As the market continues to evolve, it will be important to monitor the risks and potential impacts on market participants, including issuers of stablecoins like Circle.

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Tagged : BANKING SYSTEM / Circle / News / Stablecoin / SVB / USDC

Circle’s USDC Reserves Remain Stuck at SVB, Raises Concerns Over Crypto Stability

by Blockchain NewsMarch 11, 2023

Circle is one of the leading issuers of USDC, and the company has been on a mission to make it the preferred stablecoin in the cryptocurrency space. However, recent developments have raised concerns over the stability of USDC and its issuers.

On March 10, Circle confirmed that $3.3 billion of its $40 billion USDC reserves held at Silicon Valley Bank (SVB) have not been processed, despite wires being initiated on Thursday to remove the balances. This has raised concerns over the stability of USDC and its issuers, as investors worry about the possibility of a sudden loss of value.

This development follows Circle’s disclosure in its latest audit that as of January 31, $8.6 billion, or roughly 20% of its reserves, was held in several financial institutions, including the recently bankrupted Silvergate and the now-shuttered SVB. This has raised questions over Circle’s risk management practices and its ability to ensure the stability of USDC.

Circle has assured investors that it is working to resolve the issue with SVB and that it is confident in the stability and liquidity of USDC. However, the incident has once again highlighted the need for increased regulation and oversight of stablecoins and their issuers.

The cryptocurrency industry has long been resistant to regulation, viewing it as antithetical to the decentralized and open nature of cryptocurrencies. However, incidents like this one highlight the potential risks and vulnerabilities of the industry, and the need for regulatory frameworks that can protect investors and ensure the stability of cryptocurrencies.

The stability of stablecoins like USDC is crucial to the development and adoption of cryptocurrencies, as they provide a less volatile alternative to Bitcoin and other cryptocurrencies. However, incidents like this one raise questions about the reliability of stablecoins and their issuers, and highlight the need for greater transparency and oversight in the industry.

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Tagged : Circle / CRYPTO STABILITY / News / Reserves / SVB / USDC