A hearing to look into the failure of #SVB and #SignatureBank has been planned by the US House Financial Services Commission, and witnesses from the Federal Reserve and Federal Deposit Insurance Corporation are expected to give testimony on March 29.

Martin Gruenberg, the head of the FDIC, and Michael Barr, the vice chair for supervision at the Fed, are anticipated to testify. Representatives Maxine Waters and Patrick McHenry initiated the hearing. They said that this hearing will aid the committee in comprehending the causes and circumstances surrounding the failure of the banks.

Earlier this month, on March 10, Silicon Valley Bank collapsed as a result of a bank run by significant depositors. To protect the majority of uninsured depositors, the government intervened, though. As it closed on March 12, Signature Bank apparently had no solvency difficulties. When New York regulators intervened, they turned the bank's insurance operations over to the FDIC.

As a result of the bank failure, several MPs have suggested that exposure to #cryptocurrency enterprises may be to blame. Advocates for the space, meanwhile, have asserted that officials were attempting to "de-bank" cryptocurrency and #blockchain firms. A report on the Fed's oversight and control of Silicon Valley Bank is anticipated from Barr. The Securities and Exchange Commission and Department of Justice are allegedly both starting their own investigations into the decisions made by some of the bank's officials prior to its collapse.

It has been stated by the House Financial Services Committee that it intends to hold several hearings.

Hey everyone, it’s Firoz and I’m here to break down the massive announcement by the #Fed and US policymakers that just happened today.

You know I’m all about giving you the real value and cutting through the noise, so let me tell you what this means for you and your business.

The Fed just stepped in and rescued two major banks, #SVB and #SignatureBank , from going bankrupt. These banks were in trouble because they had a lot of bad loans and deposits that they couldn’t pay back.

The Fed did two things:

They made sure that all the depositors of these banks got their money back. That means if you had an account with SVB or Signature Bank, you don’t have to worry about losing your cash. You can access it starting Monday, March 13.

They created a new facility called Bank Funding Term Program (BFTP) to provide liquidity to banks under stress. That means if other banks face similar problems in the future, they can borrow money from the Fed by posting their bonds as collateral.

This is huge, because it prevents a domino effect of bank failures that could have crashed the whole financial system. #buildtogether

But here’s the catch:

The shareholders and certain unsecured debtholders of these banks will not be protected. That means if you invested in these banks’ stocks or bonds, you’re out of luck. You just lost your money. Sorry equity investors, do your homework.

The bonds that the banks post as collateral will be valued at par. That means the Fed will ignore the market value of these bonds, which could be much lower than their face value. This is a sweet deal for the banks, because they can get rid of their junk bonds and get cash in return.

The funding that the banks get from the Fed will be at 1-year OIS plus 10 bps spread on top. That means the banks will pay a very low interest rate to borrow money from the Fed, based on the market expectation of the Fed Funds rate plus a small premium. This is also a great deal for the banks, because they can get cheap funding for a long time.

So what does this mean for you?

Well, it depends on how you look at it.

On one hand, this is good news for the economy and the stability of the banking system. It shows that the Fed is willing and able to act swiftly and decisively to prevent a financial crisis. It also shows that the Fed is supportive of innovation and entrepreneurship, because SVB and Signature Bank are known for serving tech startups and crypto companies.

On the other hand, this is bad news for the moral hazard and the fairness of the market. It shows that the Fed is bailing out some banks that made bad decisions and took excessive risks. It also shows that the Fed is favoring some banks over others, by giving them preferential treatment and access to cheap funding.

So how do you feel about this?

Are you happy that your money is safe and that the economy is stable?

Or are you angry that some banks got away with their mistakes and that the market is rigged?

Let me know in the comments below.

And remember, this is not financial advice. This is just my opinion based on what I read and what I think. #crypto2023

If you liked this article, please share it with your friends and follow me.

#ElonMusk the CEO of Tesla, offered his opinions on the continuing crisis brought on by bank collapses. This occurs amid intense criticism of the way regulators handle banks. The value of bank equities fell dramatically throughout markets as a result of the failure of #SiliconValley Bank and #SignatureBank in the United States as well as the most recent emergency merger agreement between #CreditSuisse and UBS Group. In the meantime, the cryptocurrency market exhibited inverse behavior to the macro trend driven by the news of bank crises.

In the meantime, Silicon Valley Bank, which is already functioning as a nationally chartered bank, is being acquired by the Federal Deposit Insurance Corp (FDIC), which is improving the bidding process for the acquisition. On Monday, the news of the Credit Suisse UBS merger caused a decline in bank and bond shares since investors in the riskier Credit Suisse bonds suffered significant losses because the agreement essentially caused the $17 billion worth of Credit Suisse notes to be written off.

Musk recently compared the bankrupt cryptocurrency exchange #FTX to Lehman Brothers, Credit Suisse, and Silicon Valley Bank in a tweet. This expresses his opinion on the devastating impact the failure of the Sam Bankman-Fried corporation had. The millionaire is well-known in the cryptocurrency community not just for his connections to memecoin Dogecoin (DOGE), but also for his strong relationships with CZ, CEO of Binance.

Michael Burry, who gained notoriety for shorting the mortgage bond market in 2007, is indicating that the market may be nearing a bottom at the moment. This follows his prior claim that the current situation is comparable to the banking crises of 2003 and 2008. Burry made a comparison between the current situation and the 'stupid' risks that led to the demise of the #SVB and #SignatureBank .

The trader cited the instance of #JPMorgan making a financial commitment during the Knickerbocker Crisis in 1907 as an illustration. The US regulators stepped in to preserve consumer savings in the wake of #SiliconValley Bank's failure. Therefore he made a subliminal allusion to the possibility that the markets would bottom as a result of this intervention, similar to the JP Morgan move. Given the current behavior, does this imply that the price of Bitcoin will continue to rise?

“In October 1907, Knickerbocker Trust failed due to risky bets, sparking a panic. Two others soon failed, and it spread. When a run began on a healthy Trust, J.P. Morgan made a stand. 3 weeks later the Panic resolved & markets bottomed. A stand was made this past weekend.”

Yet this runs directly counter to his most recent assertion that the financial issue may be resolved rapidly. He said that there was no real threat present.

In an effort to locate purchasers for Silicon Valley Bank, the Federal Deposit Insurance Corp. (FDIC) is now seeking to conduct an auction procedure. Once Bitcoin crossed the $26,000 barrier on Tuesday, the #cryptocurrency market began to exhibit an adverse association with the American financial industry. Hence, if a market crash occurs, will Bitcoin surpass $30,000 in the upcoming weeks?

A chance for Europe to profit from the crisis arises as #crypto companies in the US look for alternatives to #Silvergate and #SignatureBank .

In terms of crypto innovation, Europe has at times found it difficult to stay up with the United States. It has seemed that the U.S. has been the core of cryptocurrency from its birth, whether that be through stablecoins, trade volumes, or adoption.

However, the longer it takes for U.S. banks to declare that they are open for crypto business—that is, willing to accept some of the millions of dollars that were once parked at Silvergate—the more likely it is that crypto firms will choose a location like Europe, where regulations are more transparent and fiat payment rails are simpler.

The Markets in Crypto-Assets Act (MiCA), which provides legal clarity in Europe, stands in stark contrast to the murky regulatory landscape in the United States, where businesses appear to encounter new regulatory challenges every day. Any crypto organization's operations are put in an atmosphere that is getting more difficult as a result. This will be an important factor to take into account for both new and existing market participants.

Additionally, it appears that American politicians are making every effort to stifle dollar on-ramps into cryptocurrencies, leaving the door wide open for other countries to surpass the U.S. in terms of competitiveness.

The good news for investors is that the crypto business has become less dependent on fiat currency over the past few years when it comes to trading. Following the Silvergate issues last week, the percentage of market share of all volume on centralized exchanges for #Stablecoins has actually just risen to an all-time high as investors continue to favor stablecoins over conventional currency. Stablecoins now account for the great bulk of exchange volume, up from 79% to over 90% in only the last year.

Because there is less reliance on money, crypto investors are less negatively impacted by the U.S. banking shutdown. Stablecoins are becoming more and more popular among cryptocurrency investors as a medium of exchange, but not with the companies who run the trading platforms. These institutions will be the ones to suffer the most from a dollar (USD) shutdown first.

Without access to a U.S. bank, organizations like exchanges will need to modify the services they provide. Consider trading hours: If an exchange does not have access to USD payment networks that are available around-the-clock, it is very possible that it will only be able to serve consumers during U.S. trading hours. In this case, the opportunity cost of foregone trading tactics outside of trading hours might also hurt investment funds with U.S.-based investors.

Profits In Euros

Yet, Euro volumes demonstrate that what hurts one region, helps another. Early signs point to the euro perhaps benefiting greatly from a U.S. crypto banking ban, with volumes for the BTC-EUR pair surging as the Silvergate issues continued. The market share of the bitcoin-euro pair in relation to the US dollar reached a record high last week, jumping to 21% of BTC volumes from 7% in November.

Will a U.S. bank raise its hand to accept cryptocurrency deposits at this point? The trend of increasing euro volumes may continue if the response is no, at least not for a time.

The big question in the US is whether a bank will raise its hand. Given the consolidation of larger banks that we are currently witnessing in the banking industry, the bigger banks currently have no need to accept crypto deposits.

Smaller banks are those who need to draw in a new influx of deposits since they are struggling to compete in a market that is becoming more and more oligopolistic with companies like #JPMorgan Chase. In a perfect scenario, multiple smaller banks would accept cryptocurrency, distributing the risk more fairly across a few different institutions rather than having all cryptocurrency deposits concentrated in just a few, as it was in the past.

It might be some time before the next group of banks opens its doors to cryptocurrency since the smaller banks will view Silvergate and Signature as a glaring illustration of institutions who were unable to diversify their deposits to the extent that would have provided some protection against a bank run.

This creates a window of opportunity for Europe and the euro to establish themselves in a sector where they have recently lagged behind.