The price of cryptocurrency Bitcoin jumped by double digits while Coinbase Global (COIN) rallied on Monday amid U.S. government efforts to prevent a banking crisis from spreading into the broader economy.
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Meanwhile, the issuer of the USD Coin Stablecoin said it remained redeemable with the dollar.
Federal and New York state regulators on Sunday closed Signature Bank (SBNY), which connected crypto firms to the traditional finance system. The New York bank’s depositors will be made whole, officials said.
Shares in Coinbase rose 5.8% on Monday. The crypto firm had disclosed that Signature held $240 million in Coinbase corporate cash. Coinbase on Twitter said it expects to “fully recover these funds.”
Bitcoin Jumps As Signature Bank Falls
Meanwhile, Coinmarketcap reports Bitcoin has jumped 16.3% to around $23,950 in the last 24 hours.
Shares in Signature Bank fell 38% last week. The collapse of crypto-friendly Silvergate Capital had pressured Signature Bank even before the crisis at Silicon Valley Bank emerged late last week. Silvergate helped institutional investors move dollars in and out of crypto-trading platforms
While depositors in Silicon Valley Bank of Santa Clara, Calif., and Signature Bank will protected, “shareholders and certain unsecured debtholders” will not be bailed out, the U.S. Treasury and FDIC announced.
Meanwhile, U.S. regulatory moves also boosted Circle Internet Financial. Silicon Valley Bank held $3.3 billion in reserves for USD Coin, or USDC, a stablecoin pegged to the U.S. dollar. According to Circle Internet, the $3.3 billion will now be “fully available.”
Stablecoin Valuation Rebounds
After falling to 86 cents on Saturday, USD Coin rebounded to near the $1 peg on Monday.
Mizuho Securities, in a research note published on Monday, said: “USDC revenue is critical to COIN, accounting for about 80% of its interest income and 23% of total revenue in Q4.”
No USDC cash reserves were held at Signature Bank.
Crypto traders rely on stablecoins to get in or out of their positions in more volatile cryptocurrencies, while companies often store their capital and profits in stablecoins.
Meanwhile, the price of Bitcoin remains volatile. Bitcoin dipped to below $20,000 on Friday. While Bitcoin rebounded Monday it’s still below its Feb. 21-22 high in 2023 in the neighborhood of $25,000.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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