TrueUSD Moves $1B in Reserves To The Bahamas After U.S. Banking Failures
The company behind TrueUSD, the fifth-largest stablecoin, moved $1B of the company’s reserve assets to a Bahamas-based financial institution citing the tumultuous state of the U.S. banking sector on Wednesday. Archblock, the firm that oversees TrueUSD’s $2B in reserve assets, moved the funds to Capital Union Bank. The Bahamas-based bank now holds $1.4B of the…
By: Samuel Haig •Byte
The company behind TrueUSD, the fifth-largest stablecoin, moved $1B of the company’s reserve assets to a Bahamas-based financial institution citing the tumultuous state of the U.S. banking sector on Wednesday.
Archblock, the firm that oversees TrueUSD’s $2B in reserve assets, moved the funds to Capital Union Bank. The Bahamas-based bank now holds $1.4B of the stablecoin’s reserves, according to an attestation from TrustExplorer.
“We moved money to Capital Union Bank mainly to secure funds as we are able to go straight into very short-term US Treasuries, which in itself is funny,” Alex de Lorraine, CFO and COO of Archblocks, told Bloomberg. “The funds are with the US, but we need to use an offshore bank to achieve that.”
The move is one more sign crypto firms are being effectively driven out of the U.S., as a recent string of regulatory actions and the bank failures of the past week, has made the largest economy inhospitable for the industry compared with friendlier jurisdictions.
On Sunday, New York financial regulators shut down Signature Bank in the latest of last week’s spate of U.S. bank failures. Signature was TrueUSD’s former top banking partner, prompting Archblock to transfer its funds overseas. The attestation suggests none of TrueUSD’s collateral assets are currently held with the bank.
De Lorraine said the turmoil could have been averted if the country’s top financial institutions were willing to work with crypto firms.
“The failure of the recent banks just highlights the concentration risk that was created by lack of clear regulations,” the executive said. “I doubt you would have seen anything like the turmoil… if companies like ours would have been allowed to bank with Citi or JPMorgan.”
On March 8, Silvergate Bank said it was entering voluntary liquidation after suffering a run on its reserves. The bank run quickly spread to other institutions, with The California Department of Financial Protection and Innovation also shutting down Silicon Valley Bank (SVB) on March 10 after the bank said it needed $2.25B to honor deposits.
A joint statement from the U.S. Treasury Department, Federal Reserve, and FDIC assured that Signature and SVB’s customers would have full access to their funds while equity and bondholders suffer complete wipeouts.