Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation (DFPI) on Friday – the second bank to fall within days – piling pressure on crypto venture capitalists and the wider digital asset market.
DFPI has appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver for the Santa Clara- based financial institution to manage the compensation of the insured depositors, who will get full access to their money by Monday 13.
Uninsured depositors would receive an advance dividend and a receivership certificate for the remaining amount, according to the FDIC statement, which added that it had created Deposit Insurance National Bank of Santa Clara (DINB) and transferred all the funds to the new entity.
‘‘All insured depositors will have full access to their insured deposits no longer than Monday morning, March 13, 2023. The FDIC will repay uninsured depositors an advanced dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors,’’ FDIC said in a statement.
SVB goes down with $200 billion worth of assets
Founded 40 years ago, SVB operated 17 branches in California and Massachusetts, with an estimated $209 billion in total assets and about $175.4 billion in total deposits. Some of its notable clients are the crypto-focussed venture capital firms Andreessen Horowitz and Sequoia Capital – signifying increasing turmoil in the digital asset space.
On Wednesday, Silvergate, another bank big on digital assets in California, announced it was closing down operations and voluntarily liquidating, citing the volatility in the industry and the increasing regulatory scrutiny.
Panic started when SVB announced Wednesday its intention to raise $2.25 billion to stay afloat and a sale of a $21 billion bond portfolio balance sheet restructure amounting to $1.8 billion in losses.
Its collapse with $209 billion worth of assets marks one of the greatest in history besides the wind-down of the Washington Mutual Bank at the peak of the 2008 financial crisis, which went down with upward of $307 billion in assets, according to FDIC data.
Enjoy your financial freedom with Uphold
Get a welcome bonus of $50 when you sign up and trade at least $600 of your favorite asset
Start buying crypto in 3 simple steps
Buy, sell, and trade 250+ cryptos with low fees