• The FDIC has taken control of the assets of Silicon Valley Bank and Signature Bank to protect depositors.
• Management of the banks will be fired if taken over and those responsible for what happened can be held accountable.
• Crypto companies are struggling to find banking partners due to high risks, despite large banks offering crypto custody services.
FDIC Takes Control of SVB and Signature Bank Assets
The US Treasury, Federal Reserve, and Federal Deposit Insurance Corporation (FDIC) recently released a joint statement announcing that the FDIC had taken control of the assets of both Silicon Valley Bank (SVB) and Signature Bank. This move was taken to protect depositors, ensuring they have access to their money as of March 13th.
Equity and Bondholders Wiped Out
Regulators have confirmed that depositors will not bear any losses associated with this resolution, while equity and bondholders have been wiped out due to taking risks that didn’t pay off. Additionally, management will be fired if the bank is taken over by the FDIC and accountability will be emphasized in order to get a full accounting of what happened.
Crypto Companies Struggle for Banking Partners
The FDIC takeover has left crypto companies struggling to find banking partners as many institutions are refusing services due to perceived high risk. Even startups without financial services-oriented businesses are tagged as high-risk with limited access to banking systems. As a result, Okcoin paused USD deposits from its primary partner for customer transactions in dollars – Signature Bank – due regulatory intervention.
Victory for Decentralized Currency?
The crypto market has rallied significantly following news of the takeover; Bitcoin is up almost 18% in the last 24 hours while Ethereum has also seen gains. This could indicate that investors are seeking an alternative decentralized currency which allows them to become their own bank after onramps were bottlenecked in the US market.
The FDIC’s takeover of SVB and Siganture Banks‘ assets highlights how centralized institutions have failed customers who seek them out for traditional banking services, especially when it comes to cryptocurrency operations in the US market. However, this could also lead more people towards decentralized finance solutions which allow individuals greater autonomy when managing their financials needs safely and securely without relying on third parties or middlemen intermediaries.