Helen Partz
Global banking giant HSBC is coming to rescue the United Kingdom-based branch of the collapsed Silicon Valley Bank with a new acquisition.
HSBC officially announced on March 13 that its subsidiary, HSBC UK Bank, is acquiring Silicon Valley Bank UK (SVB UK) for 1 British pound ($1.21).
As of March 10, 2023, SVB UK had loans of around 5.5 billion pounds ($6.7 billion) and deposits of around 6.7 billion pounds ($8.1 billion), HSBC said in the announcement.
For the financial year ending Dec. 31, 2022, SVB UK recorded a profit before tax of 88 million pounds ($107 million). SVB UK’s tangible equity is expected to be around 1.4 billion pounds ($1.7 billion).
“Final calculation of the gain arising from the acquisition will be provided in due course,” HSBC wrote, adding that the assets and liabilities of the parent companies of SVB UK are excluded from the transaction. The company added that the acquisition would be funded from existing resources and would be completed immediately.
According to HSBC Group CEO Noel Quinn, the acquisition makes “excellent strategic sense” for HSBC’s business in the United Kingdom, strengthens its commercial banking franchise, and enhances its ability to serve innovative and fast-growing firms.
“We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world,” Quinn said, adding:
“SVB UK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC.”
The news comes after authorities in the United States ordered SVB to shut down operations on March 10, triggering panic in crypto markets because some major crypto companies like Circle and Coinbase had significant exposure to the bank.
Circle, the issuer of USD Coin — the second largest stablecoin by market value — is unable to withdraw $3.3 billion of its $40 billion reserves due to SVB’s collapse. Coinbase had around $240 million in corporate funds at Signature — but is expecting to recover the amount fully. Paxos, the issuer of stablecoins like Pax Dollar (USDP) and the troubled Binance USD stablecoin, also had $250 million stuck at Signature but said that its private insurance would cover the amount.
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Gareth Jenkinson
The wider cryptocurrency community continues to debate the ongoing fallout following the closure of three major American banks, with calls for neobank services for the industry on the cards.
Silicon Valley Bank (SVB), which has traditionally served startups across a number of innovation sector industries, was shuttered by California’s Department of Financial Protection and Innovation on March 10.
The reasons surrounding the closure are still coming to light but the news caused shockwaves through the industry, primarily driven by USD Coin issuer Circle having over $3.3 billion of its $40 billion reserves locked up in the bank.
Signature Bank, which also serves some cryptocurrency firms, followed a similar fate on March 12. The New York Department of Financial Services (NYDFS) took possession of the bank to prevent further bank runs as customers looked to pull out funds from SVB and Signature.
The closure of SVB was particularly hard-hitting, as the USDC stablecoin briefly lost its $1 peg driven by major uncertainty around the effect Circle’s exposure would have on the ability to manage redemptions.
USDC has seen its peg creep back up to the $1 mark after Circle CEO Jeremy Allaire announced that the stablecoin issuer has lined up new banking partners as of March 13 in the United States.
Given the tumult of the past few days, the cryptocurrency ecosystem is now taking a closer look at ties to traditional finance institutions that serve fiat currency deposits, withdrawals and monetary flows.
Coinbase CEO Brian Armstrong took to Twitter on March 13, saying that the American cryptocurrency exchange has previously considered features that could potentially bypass or serve to bridge gaps experienced in the latest mainstream banking failure.
Ryan Lackey, CSO of cryptocurrency insurance firm Evertas, questioned whether the exchange had considered offering neobanking services to high-net-worth individuals and businesses.
Armstrong replied saying that Coinbase would need to add a number of features and opened the door for comments in the thread:
“Definitely something we've thought about. Need a few more features like outbound wires, multi-user support etc. Non-fractional reserve "banking" is definitely looking more attractive right now.”
Coinbase confirmed that it had around $240 million held at Signature Bank on March 10, but expects to recover all of its corporate cash holdings.
The closure of SVB and Signature Bank caused fears of widespread runs on regional banks across the United States over the weekend. A Bloomberg report also suggests that the United States Federal Reserve and Federal Deposit Insurance Corporation (FDIC) are weighing up the creation of a fund to cover deposits at ailing banks.
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Prashant Jha
A solo Bitcoin miner has managed to mine the 780,112th block in the Bitcoin blockchain, receiving a 6.25 Bitcoin block reward in return. The estimated value of the payout is over $150,000.
The solo miner was also lucky to have produced a valid hash after just two days of mining, as the event itself is rare, and it can take months for a solo miner to produce a valid hash.
The rare event occurred on March 10 and was the 270th solo mined block in Bitcoin’s 13-year-long history. The event is rare because a solo miner of this size usually solves a block, on average, about once every 10 months.
The miner created a solo mining pool using the Solo CK Pool mining service, for which they produced a valid block hash and were rewarded with 6.25 BTC, with a fee reward of roughly 0.63 BTC.
Con Kolivas, the Solo CK mining pool admin, noted that the miner behind the rare event might have temporarily rented hashing power to produce the output hash.
Bitcoin mining requires miners to input computational power to solve and add the next Bitcoin block to the network. However, with the growing popularity of BTC mining and the constant rise in the network hash rate and powerful mining machines, it’s near impossible for a solo miner to solve the whole block on their own.
Thus, a valid block hash is often produced using the computational power of multiple mining rigs, all trying to mine the next block. The block reward is distributed according to the input hash rate of each miner in the mining pool.
The Solo CK mining pool has been behind several solo-mined Bitcoin blocks in the past as well. Two of these solo-mined blocks came in January 2022, only two weeks apart, with the first occurring on Jan. 11, 2022, at a block height of 718,124, followed by another on Jan. 24, at a block height of 720,175.
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This Daily Dose was brought to you by Cointelegraph.
