FDIC agreed to sell Silicon Valley Bridge Bank to First Citizens

The Federal Deposit Insurance Corporation entered a purchase-and-assumption agreement with First-Citizens Bank & Trust Company on March 26, 2023, transferring the deposits and loans of Silicon Valley Bridge Bank to a private-sector owner. The agreement supplied an operating successor for Silicon Valley Bank after regulators closed the technology-focused lender on March 10.

For cryptocurrency markets, the connection was indirect but material. Circle, the issuer of the USDC stablecoin, had disclosed that $3.3 billion of the assets backing USDC remained at Silicon Valley Bank when it failed. That exposure had already been protected through the federal government’s March 12 decision to make all Silicon Valley Bank depositors whole. The March 26 sale therefore did not create Circle’s protection or, by itself, restore USDC’s dollar peg. It did establish the next institutional home for the failed bank’s deposit and lending franchise.

What the agreement covered

The FDIC said First Citizens would assume all deposits and loans of Silicon Valley Bridge Bank. Its 17 branches were scheduled to open under First Citizens on March 27, with customers instructed to continue using their existing branches until notified that systems had been converted.

The transaction included the purchase of approximately $72 billion of assets at a $16.5 billion discount, according to the FDIC’s March 26 release. Approximately $90 billion in securities and other assets were to remain in the receivership for later disposition. The FDIC and First Citizens also entered a loss-share arrangement covering commercial loans purchased from the bridge bank, while the regulator received equity-appreciation rights in First Citizens BancShares common stock with a potential value of as much as $500 million.

Those figures describe the transaction’s structure, not an independent valuation of every asset or a final accounting of the bank failure. The FDIC’s estimated cost to the Deposit Insurance Fund was about $20 billion on March 26, but the agency explicitly said the exact cost would be determined when the receivership ended.

Why USDC made the sale relevant to crypto

Circle reported on March 12 that the $3.3 billion held at Silicon Valley Bank represented about 8% of the total USDC reserve. It described the reserve at that point as 77%, or $32.4 billion, in short-dated U.S. Treasury bills and 23%, or $9.7 billion, in cash. These were issuer-reported reserve figures, not measurements produced by the FDIC or First Citizens.

The Treasury Department, Federal Reserve and FDIC had already announced that all Silicon Valley Bank depositors, including uninsured depositors, would receive full access to their funds beginning March 13. Circle consequently said its Silicon Valley Bank deposit would be fully available and that USDC remained redeemable one-for-one for dollars.

The sequence exposed a structural dependency beneath stablecoins marketed as continuously transferable digital dollars. USDC could move on public blockchains around the clock, but Circle acknowledged that issuance and redemption were constrained by the operating hours of the banking system. Reserve custody, cash transfers and redemptions still depended on regulated banks and government-operated payment infrastructure.

What was unresolved on March 26

The March 26 records did not establish that Circle would remain a customer of the acquired bank. Circle had already said the cash portion of its reserve was held primarily at BNY Mellon and that it was adding banking partners. The sale also did not erase the wider concentration and liquidity questions raised by the March bank failures.

First Citizens published its own transaction announcement on March 27, confirming the branch transition and stating that customer accounts would initially remain accessible through existing channels. That next-day statement corroborates the agreement’s implementation, but it should not be mistaken for information available before the FDIC announced the deal on March 26.