Today’s updates on the Silicon Valley Bank case and the reaction of the crypto world
Today’s updates on the Silicon Valley Bank case and the reaction of the crypto world
Crypto

Today’s updates on the Silicon Valley Bank case and the reaction of the crypto world

By Andrea Porcelli - 14 Mar 2023

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In this article we will go over how the crypto world reacted to the Silicon Valley Bank crisis, with an eye on today’s updates on the case.

The US government intervened to prevent the collapse of Silicon Valley Bank (SVB) from having a systemic impact similar to that of Lehman Brothers in 2008. However, this action resulted in the closure of a second bank, Signature Bank.

The Treasury, the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve announced that SVB depositors will be able to access their funds starting Monday, while the central bank offered a new liquidity window to help banks handle customer demands in the event of a run.

Meanwhile, the closure of Signature Bank, which served many cryptocurrency companies, was the second significant bank failure in three days and the third largest in history, after Washington Mutual in 2008 and SVB.

The crypto world rebounds today amid the Silicon Valley Bank crisis

Venture capital firms and tech startups were hit hardest by SVB’s failure, but numerous cryptocurrency companies also reported exposure to the bank.

The likes of BlockFi, Circle, Avalanche, and many others have declared exposure to Silicon Valley Bank. Situation that led several of these companies to temporarily suspend customer withdrawals.

However, the one suffering the most seems to be Circle’s stablecoin, USDC, which despite reassurances from the CEO, Binance and Coinbase have suspended its exchange.

But how have other crypto assets reacted?

Bitcoin has recovered more than 20% of its value from its lows in recent days, and so have more or less all the other tokens, led by the leading cryptocurrency.

On the other hand, this is in contrast to the stock market, which seems to be suffering in no small measure, insensitive to the statements of the American president.

But this is perhaps the essence of Bitcoin, the contrast with the stock market. Bitcoin was born precisely to give an alternative to the classic financial market, and today with the crisis in this market, the world’s most famous crypto seems to be coming out on top.

Similarly, Ethereum is also showing positive signs with an increase of about 7% since last Friday, when it had reached its lowest point of the month.

Both major crypto assets, Ethereum and Bitcoin, hit their lowest point of the month last Friday. There is no doubt that the news of the banking crises at first created a negative effect for investors, who were then reassured by the various crypto companies.

In general, we can say that the cryptocurrency market is on the upswing these days. Other cryptocurrencies such as Cardano, Ripple, Polygon, and Dogecoin are also on the rise.

We cannot predict whether the effects of the bank collapse will be felt later, but for now the crypto world is reacting the best it can.

Some consider the closure of Signature Bank a real political conspiracy

“There are no objective reasons for the closure of Signature Bank. I think part of what happened was due to the regulator’s desire to send a message, a very strong one, against crypto. We were used as a scapegoat because there was no insolvency, based on fundamentals.”

The statement came from Barney Frank, a former lawmaker who played an important role in passing legislation to safeguard the banking industry in the aftermath of the 2008 financial crisis.

He currently serves on the board of Signature Bank, which was recently closed due to financial problems.

The message is alarming and could substantiate the concerns of those who see the closure of Signature Bank as a political move to restrict the few banks in the United States that provide banking services to the cryptocurrency industry, including intermediaries such as exchanges and operators of stablecoins and other related services.

According to some rumors, even some regulators are puzzled by the sudden closure of the bank, as there seems to be no reason behind the decision.

To be precise, there was a problem with a deposit on Friday, caused by a contagion effect from Silicon Valley Bank.

Similar problems have been experienced by other banks of similar size, but they have received the full support of the Federal Reserve and other federal networks.

The situation raises questions, and we can only hope to discover the truth behind it.

It is clear that something is amiss and it appears that the US government is trying to exert control over various sectors and potentially suppress the cryptocurrency industry on a whim.

However, the impact may only be felt within the United States as the industry continues to thrive and grow elsewhere.

 

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