The recent seizure of Silicon Valley Bank resulted in the mandated shutdown of Signature Bank, a significant lender in the cryptocurrency industry. The joint statement released by the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation cited “systemic risk” as the reason for this action.

The bank’s deposits were nearly 90% uninsured at the end of 2022 per regulatory filings. As part of its protocols, only deposits exceeding $250,000 would be insured. This led to a situation where many lenders who paid in crypto saw their money decline in value considerably after the market crash last year.

In a show of support to depositors affected by Signature and SVB’s closure, regulators promised that they would create a special emergency insurance fund that would reimburse depositors entirely. The move is welcome news for those feeling anxious about their deposits’ status at either institution.

Since Signature Bank was one of the first financial institutions to begin accepting crypto deposits back in 2018, it played an integral role in fostering trust among investors initially; however, it now appears that its association with digital assets has contributed significantly to its downfall.

The current state of both the fiat and cryptocurrency financial industries raises questions about who or what enabled these situations to arise initially.

The surge of Bitcoin’s value has shocked the world amidst a financial crisis. The cryptocurrency experienced an almost 20% increase in just the last 24 hours, now hovering around $24,000. This rise was accompanied by an additional $70 million increase in the entire crypto market, which now exceeds $1 trillion.

The recent closure of Silicon Valley Bank (SVB) and Signature Bank created panic among investors. Yet despite this uncertainty, regulators established emergency insurance to repay SVB and Signature Bank’s clients after their closure. Due to this assurance, investors turned to Bitcoin, making it one of the key players in the market.

A Luno crypto exchange executive stated that “markets have turned euphoric” since depositors’ money has been secured and there is no chance of a bank run occurring. Regulators intended this sort-of-bailout as a way of avoiding any further financial crises.

Although traditional Wall Street may not be thrilled with this move, investors continue investing their money into cryptocurrencies like Bitcoin breaking new records during these uncertain times.

the chief executive officer of Binance, said in a tweet that the exchange had “zero” exposure to the failed bank. Tyler Winklevoss, the co-founder of Gemini, said in a tweet that the exchange “does not have any deposits with SVB.”

The crypto markets were rocked on Friday when it was revealed that Silicon Valley Bank had collapsed, leaving USD Coin (USDC) exposed to its issuer Circle Internet Financial Ltd. The second-largest stablecoin traded as low as 81.5 cents as investors digested the news. Late Friday, Circle disclosed that $3.3 billion of its roughly $40 billion stockpile of reserves was held with the failed bank. On Saturday afternoon, Chief Executive Officer Jeremy Allaire provided additional detail on Circle’s exposure to the bank, saying in a statement that USDC was “100% collateralized with a combination of cash and US Treasuries” and would remain “redeemable 1 for 1” with the US dollar.

The fall in USDC had a knock-on effect on DeFi applications which let users trade, borrow and lend coins and which tend to rely heavily on trading pairs involving the stablecoin. On Saturday, members of the DeFi community that runs DAI proposed changes to the mechanism that helps keep its stablecoin pegged to $1 in a way that would reduce its exposure to USDC. Coinbase Global Inc. said it would be “temporarily pausing” the conversion of USDC into US dollars during the weekend.

The crypto sector was already reeling from a prolonged rout that’s knocked $2 trillion off the value of digital assets since November 2021, precipitating a series of implosions such as the algorithmic TerraUSD stablecoin, the Three Arrows Capital hedge fund and the FTX exchange. The TerraUSD token — known as UST — tried to use a mix of algorithms and trader incentives involving a sister token, Luna, to hold its value. Crypto firms including Binance and Gemini used Twitter to try to reassure their customers about any risks posed by SVB.

Trading in USDC futures suggests optimism Circle will overcome its current pinch. Data from research firm Coinglass shows that funding rates for USDC contracts