Zurich – 13.03.2023 – In the interest of transparency towards its clients and partners, Crypto Finance AG comments on the latest developments in the financial sector, including the situation of Circle Internet Financial Limited, Silicon Valley Bank (SVB), and the consequences it has on USDC.
Due to the collapse of Silicon Valley Bank, the financial markets experienced high volatility and increased trading volumes over the past few days. The situation was precipitated by the sale of bonds at a loss, and a proposed capital raise that triggered systemic risk concerns within the markets. Initially, traditional financial markets were affected. However, the concerns soon spread to the digital asset market. Circle confirmed USD 3.3bn of exposure (8.25% of USD 40bn in reserves) to SVB, raising concerns around USDC, which resulted in a de-pegging of the currency from the USD.
USDC’s importance as a settlement currency for digital assets for crypto institutions has been continuously increasing, especially since the recent collapse of Silvergate Bank (widely used as a crypto settlement bank), when the release of financial results was delayed post a withdrawal of USD 8bn in depositor funds. This increased dependence of the system on USDC could be observed since BUSD fell out of favour earlier this year by large institutional market participants.
As trusted partner in the digital asset space, and part of Deutsche Börse Group, Crypto Finance has closely been monitoring the market developments as well as its own exposure to USDC. Crypto Finance’s teams, including its trading desk, took immediate action over the weekend.
Crypto Finance AG managed its exposure to USDC based on early risk indicators and has no US regional bank exposure.
As a substitute for crypto settlement rails, the market has since fallen back on traditional banking channels. Currently, settling is being done with counterparties in USD via banking rails, which results in longer than usual settlements with clients and counterparties. The actual settlement situation is changing fast, and Crypto Finance AG will provide continuous updates as the market developments occur.
As a precautionary measure, Crypto Finance AG’s trading desk will facilitate the USDC trade on a manual and agency basis. Electronic USDC/CCY and CCY/USDC pricing is disabled until further notice.
Crypto Finance AG remains available at any time for further inquiries on the current market developments.
About Crypto Finance Group
Crypto Finance Group – a prudentially FINMA-supervised financial institution and part of Deutsche Börse Group – offers professional digital asset solutions. This includes one of the first FINMA-approved securities firms with 24/7 brokerage services, custody, infrastructure, and tokenisation solutions for financial institutions. It also comprises the first FINMA-approved manager of collective assets for crypto assets, with a selection of crypto investment solutions, including the first FINMA-regulated crypto fund. With a team of over 120 employees, Crypto Finance Group is headquartered in Switzerland.
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