In the Shadow of Bank Runs: Lessons from the Silicon Valley Bank Failure and Its Impact on Stablecoins
Originally published by the Federal Reserve Board (FEDS Notes) on December 17, 2025, by Chuan Du, Ria Sonawane, and Cy Watsky.
This Federal Reserve analysis uses granular blockchain data to trace how Silicon Valley Bank's March 2023 failure triggered a run on USDC and spread contagion through DeFi. The authors show how the inability to access $3.3 billion in deposits depegged USDC, and how smart-contract Peg Stability Modules transmitted that stress to other stablecoins such as Dai, GUSD, and USDP, highlighting bidirectional risk between traditional banking and crypto markets.
