After a tumultuous few days, in which Silicon Valley Bank’s stock plummeted amid liquidity fears, the startup-centric bank has finally shut down.
The California Department of Financial Protection and Innovation closed SVB Friday afternoon, appointing the Federal Deposit Insurance Corporation (FDIC) to take over operations. To protect the bank’s clients, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB) and transferred SVB deposits to this new entity.
Created by Congress in 1933, the FDIC is meant to maintain confidence in the American financial system by making depositors at insured banks whole should those banks go under.
SVB depositors “will have full access to their insured deposits no later than Monday morning,” said the FDIC in an announcement. The bank held $209 billion in assets and roughly $175 billion in deposits at the end of last year. It’s unclear how many deposits were above the $250,000 insured limit.
Ahead of today’s news, Peter Thiel’s Founder’s Fund urged portfolio companies, which includes stablecoin provider Paxos, to withdraw their funds from Silicon Valley Bank.
The effect on crypto, though, may be minimal, according to 21Shares research director Eliezer Ndinga. “It may to some extent impact the crypto industry, most probably startups offering existing products and services in various sectors like Fintech while leveraging public blockchains or other elements of the crypto stack,” he told Decrypt.
The bank’s shuttering comes just days after Silvergate, a crypto-friendly bank based in California, also wound down its operations. Silvergate’s ties with crypto were far tighter than Silicon Valley Bank’s.
A long list of crypto firms, including Coinbase, Crypto.com, Gemini, Bitstamp, and Circle, all cut ties with the crypto-friendly bank days before it went under.
