The bank’s insured deposits have been moved to the recently established Deposit Insurance National Bank of Santa Clara (DINB), and account holders will be able to fully access their funds starting on Monday morning, March 13th, 2023.
Silicon Valley Bank, a major financial institution that provides services to venture-backed companies, recently found itself in financial turmoil. In the past few days, the entire banking sector has been filled with concern over the bank’s future, as it disclosed that it needed an influx of capital and was considering a potential sale.
Unfortunately, it was revealed that California regulators have closed the bank due to the institution’s financial troubles. This marks the first Federal Deposit Insurance Corporation-insured bank to fail in 2023, and the news has sent shockwaves throughout the industry.
The closure of Silicon Valley Bank has had implications for the cryptocurrency industry as well. Stablecoin issuer Circle held an undisclosed amount of cash in the now-closed bank.
This development was revealed in a USDC Reserve Report, which listed the financial institutions that custody the cash for the platform. Circle listed Silicon Valley Bank among other US-regulated financial institutions that held the platform’s reserves.
As the receiver, the Federal Deposit Insurance Corporation (FDIC) has immediately transferred all insured deposits of Silicon Valley Bank to the newly created Deposit Insurance National Bank of Santa Clara (DINB). Depositors will have full access to their insured deposits by Monday morning, March 13, 2023, according to an official statement from the regulator.
The regulator also explained that uninsured depositors would be given a “receivership certificate for the remaining amount of their uninsured funds” and entitled to future dividend payments once the FDIC sells all Silicon Valley Bank assets.
Silicon Valley Bank, which is also known as SVB, operated 17 branches across California and Massachusetts. All branches and the main office will be open on March 13 to facilitate depositor access.
The bank is one of the United States’ 20 largest banks by total assets and provided financial services to several crypto-focused venture firms, including Andreessen Horowitz and Sequoia.
The downfall of SVB was swift, coming less than 48 hours after management disclosed that they needed to raise $2.25 billion in stock to shore up operations. The announcement was part of the bank’s mid-quarter financial update, where it disclosed the sale of $21 billion in securities at a $1.8 billion loss.
Trading in SVB stock (SIVB) was halted on March 9 due to extreme volatility, and the stock’s 60% drop was the biggest single-day wipeout in history, according to The Wall Street Journal.