Key takeaways :
- The U.S. Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Protection and Innovation shuttered Silicon Valley Bank (SVB) after it went through financial difficulties.
- SVB Financial has a reputation for assisting venture capital firms that promote cryptocurrencies, thus its demise would be another blow to the cryptocurrency-friendly banking industry.
- Currently, Circle appears to be the cryptocurrency company most exposed to Silicon Valley Bank.
Several cryptocurrency companies have already indicated their exposure to Silicon Valley Bank (SVB), which for a long time upheld a profile as one of the most significant lenders to digital start-ups in the world, as the aftermath of the bank’s shocking failure keeps rolling out.
The closing of Silicon Valley Bank was announced by the California Department of Financial Protection and Innovation early on Friday. SVB transferred all FDIC-insured deposits to the Deposit Insurance National Bank of Santa Clara.
The FDIC stated that uninsured depositors would get certificates for the sums of their uninsured money by March 13, while all insured depositors would have complete access to their insured deposits by that date.
The crypto sector was still reeling from the voluntary insolvency of its chosen bank, Silvergate, on Wednesday when the next rock dropped.
SVB Financial is renowned for supporting crypto-friendly venture capital companies, thus its demise would be yet another blow to the industry.
With nearly 90% of its deposits coming from companies that deal in digital assets, Silvergate had established its company in the cryptocurrency sector. Customers of the company started taking deposits out in large numbers as a result of the failure of customer FTX and the escalating bear market.
The cryptocurrency companies affected by SVB’s collapse are listed here, along with those who have openly stated they were spared the consequences.
Although Silicon Valley Bank is not directly tied to the cryptocurrency business, certain crypto firms may have exposure to the collapsed bank.
Circle had funds in several institutions up to January, including Silicon Valley Bank. TechCrunch claims that the company recently transferred money between banks, thus it may or may not now have funds with SVB.
Although it is unknown how much Circle may have with Silicon Valley Bank in particular, it presently has $11 billion in bank deposits, or a quarter of its USDC reserves.
According to documents relating to BlockFi’s bankruptcy proceedings that were submitted on Friday, the bankrupt cryptocurrency lender BlockFi has $227 million in money held at SVB. These funds are supposedly not covered by the FDIC’s deposit insurance because it is invested in a money market mutual fund, which might be against the law under bankruptcy regulations.
The Avalanche Foundation, which backs the Avalanche blockchain, disclosed Friday night that it has “just over” $1.6 million in exposure to Silicon Valley Bank
SVB is a concern for Yuga Labs, the $4 billion business that created the popular NFT collection Bored Ape Yacht Club, among other things. Greg Solano, a co-founder of Yuga, stated on Friday that the business has “extremely low exposure” to the defunct bank, though Yuga has not yet specified the amount.
The sum “doesn’t harm our business or ambitions in any way,” according to Solano.
Businesses that have no exposure to SVB include Binance. Changpeng Zhao, CEO of Binance, stated that his exchange company had no exposure to Silicon Valley Bank. “Funds are #SAFU,” he tweeted.