USD Coin regains $1 peg, EU on alert after SVB collapse & more

The US Government’s decision to provide a safety net for SVB depositors has led to a surge in the value of major cryptocurrencies like Bitcoin, Ether and Dogecoin and the market capitalisation breaking the $1 trillion ceiling.

Market participants and industry experts opine that the surge in cryptocurrency prices reflects the growing correlation between the broader financial market and digital currencies. Experts suggest that this correlation is expected, given the impact of hundreds of billions of dollars, where investors tend to rush towards safer havens, such as gold or cryptocurrencies, in such cases. However, this event cannot be seen as a singular factor to derive the correlation between cryptocurrencies and the broader financial market, according to them. Read full here

Stablecoin USD Coin, issued by Circle, is gradually returning to its $1 peg, after a tumultuous weekend, after the company’s CEO, Jeremy Allaire, confirmed that Circle’s reserves are secure and the firm has found new banking partners who will be operational on March 13. According to CoinGecko data, USDC’s value has risen by 4.5 percent in the past 24 hours and is currently trading at $0.995. However, the coin’s value dropped as low as $0.87 over the weekend amid concerns about $3.3 billion worth of USDC reserves held by Silicon Valley Bank (SVB), which was shut down by the California Department of Financial Protection and Innovation on March 10. Read details here

Euler Finance, a lending protocol that facilitates crypto lending and borrowing, has suffered a flash-loan attack resulting in a loss of $197 million, according to security firms BlockSec and PeckShield. Quoting the blockchain security firms, The Block reported that the attack took place at 4:50 am ET and involved the siphoning off of $136 million worth of staked Ether, $34 million worth of USD Coin, $19 million worth of wrapped Bitcoin, and $8.7 million worth of DAI from the protocol. Identity of the perpetrator and the method of attack remains unknown. Euler Finance’s team is collaborating with security professionals and law enforcement to gather more information, which they will release to the public later. Take a look

Markus Ferber, a representative of the leading centre-right party in the European Parliament and an influential lawmaker in the European Union has urged regulators to prevent panic from spreading following the collapse of SVB. Ferber called on EU bank supervisors to assess the vulnerability of European lenders to interest rate shocks similar to those that caused the Californian bank to fall on Friday, March 10. He emphasised the importance of containing panic, which he described as “infectious” and “not to be allowed to spread”. He also raised concerns about how sovereign bonds are treated under bank-capital rules, a recurring theme among German politicians who argue that the current regulations underestimate the risk posed by indebted governments such as Italy and Greece. Read more here

Digital asset investment products have seen outflows for the fifth consecutive week, with the total amount reaching a record high of $255 million, representing 1.0 percent of total assets under management (AUM). According to a report by Coinshares, while the outflows are the largest on record in dollar terms, the percentage of outflows relative to total AUM was greater in May 2019, when outflows represented 1.9 percent of AUM. The negative sentiment was broad and was seen in both North America and Europe. However, the US stood out with inflows of $11 million, primarily into long-Bitcoin. Despite the increase in total AUM since May 2019 (816 percent), the outflows wiped out all the inflows seen this year, with outflows now standing at $82 million year-to-date. Read more here

Meta, formerly known as Facebook, has announced that it will stop working on digital collectibles, also known as non-fungible tokens (NFTs), in order to focus on other ways to support creators, businesses, and people. This decision was made to prioritize areas where the company can make a greater impact at scale. Stephane Kasriel, head of commerce and financial technologies at Meta, thanked their partners who have been working with them on this journey and who are doing great work in this dynamic space. He added that the company learned a lot from this experience and will be able to apply this knowledge to products they are continuing to build to support creators, people, and businesses on their apps, both today and in the metaverse. Read more here

According to sources familiar with the matter, the US Justice Department is conducting an investigation into the collapse of the TerraUSD stablecoin last year. This development increases the pressure on Do Kwon, the South Korean crypto entrepreneur who created the stablecoin, as he may now face criminal charges in the US. The FBI and the Southern District of New York have reportedly questioned former employees of Kwon’s company, Terraform Labs Pte. Ltd., and have expressed interest in speaking with others. As both agencies are part of the Justice Department, the SDNY is typically responsible for prosecuting high-profile financial crimes. Take a look

The US Commodity Futures Trading Commission (CFTC) has announced new leadership for its Technology Advisory Committee. Carole House, a former White House official, has been named as the new chair, while Ari Redboard, from blockchain analysis company TRM Labs, will serve as vice chair. The CFTC published a list of committee members, which was newly constituted and sponsored by Commissioner Christy Goldsmith Romero. In a statement, Goldsmith Romero emphasised the importance of seeking advice from technology experts to protect financial markets from cyber-attacks, ensure responsible development of digital assets that protect customers, and understand the implications of emerging technologies like artificial intelligence. Read more here