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1 1 (April 25, 2023)

handle is hein.crs/goveljr0001 and id is 1 raw text is: Congressional ____ Aa Research Service The Role of Cryptocurrency in the Failures of Silvergate, Silicon Valley, and Signature Banks April 25, 2023 The involvement of a number of recently failed banks with the cryptocurrency industry seemed to be the manifestation of crypto market volatility affecting traditional finance. Failed banks' exposure to crypto adds to the policy debate over the appropriate relationship between banks and the crypto ecosystem. This Insight discusses the crypto activities of these banks and whether they may have exacerbated other bank risks. For a look at the bank failures, see CRS Insight Silicon Valley Bank and Signature Bank Failures. Banking Crypto Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank all provided banking services to cryptocurrency firms in the form of holding the deposits of, or making loans to, crypto industry companies (or both). Each bank's level of involvement with crypt firms varied. Of the three, Silvergate's deposit base exhibited the highest concentration in the crypto industry. At the time of its 2022 third- quarter report, its last before opting for a voluntary liquidation, crypto client deposits represented more than 90% of total deposits. At Signature, digital assets reserves accounted for 20% of deposits at the end of 2022. In its most recent annual statement, SVB claimed to have minimal exposure through deposits from, and loans to, crypto firms. Revelations that Circle, the issuer of the USD Coin (USDC) stablecoin, held $3.3 billion of stablecoin reserves at SVB caused USDC to depeg from the U.S. dollar and drop to less than $0.88 before regaining the peg when it became clear that all SVB deposits would be guaranteed. Loan exposure to the crypto industry is less clear. As with its deposits, SVB claimed to have minimal loan exposure to crypto firms. Silvergate, on the other hand, offered Bitcoin-collateralized loans to industry participants. At the end of September 2022, the bank held $302 million in Bitcoin-collateralized loans (of a $1.5 billion commitment) against which borrowers had posted $769.9 million in Bitcoin as collateral. Signature also previously offered digital asset collateralized loans, but it stated in its last annual report that it does not make crypto-backed loans, lend to the crypto industry, or hold crypto assets. However, a press release from a bank that bought some of Signature's assets implied Signature may have had some. Congressional Research Service https://crsreports.congress.gov IN12148 CRS INSIGHT Prepared for Members and Committees of Congress

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