Silicon Valley Bank Officially Closed By California Department Of Financial Protection And Innovation, Rocked Crypto Market?

Bank Silicon Valley. (Photo; Doc. BTC Echo)

JAKARTA - The Silicon Valley Bank (SVB), a California-based bank, has been officially closed by the California Department of Financial Protection and Innovation, which has made it included in the list of leading banks that have collapsed in US history.

This was announced on Friday, March 10 by the Federal Deposit Insurance Corporation (FDIC), which has been appointed as its recipient. The FDIC will ensure that all insured deposits will have full access to their funds on Monday, March 13.

In a press release, the FDIC announced the establishment of a Deposit Insurance National Bank of Santa Clara (DINB) to protect SVB deposits. All of the insured deposits from the collapsed bank have been transferred to DINB. The insured deposits include account ownership of under 250,000 US dollars (equivalent to Rp3.8 billion).

Meanwhile, unmitigated deposits will be given a "curretor certificate" for the remaining unintegrated deposits. The FDIC said future dividend payments "can be made to unmanaged deposits," as the agency sells SVB assets.

SVB is the largest bank to fail since the Big Recession in 2008, when Washington Mutual Bank collapsed with an asset of US$307 billion (Rp4.7 quadrillion), and was later acquired by JP Morgan. On December 31, 2022, Silicon Valley Bank had about US$209.0 billion (Rp3.2 quadrillion) total assets and around US$175.4 billion (Rp2.7 quadrillion) total deposits.

The FDIC said it still needed additional information to determine exactly how many bank deposits exceeded the insurance limit.

The bank's failure may be part of a Bitcoin drop over the past two days to below US$20,000 (Rp307 million). Panic around SVB began spreading on Wednesday after the bank announced plans to increase funding by US$2.25 billion (Rp34.5 trillion) and the sale of bond portfolios worth US$21 billion (Rp322 trillion) to restructure its balance sheet. The latest sales cost the company US$1.8 billion (Rp27.7 trillion).

The next day, Paypal co-founder Peter Thiel urged companies to withdraw from SVB, while bank CEOs told clients to "stay calm". Efforts to increase SVB's capital ultimately failed, and some companies began examining the bank in the hope of acquiring it, according to CNBC.

The failure of Silicon Valley Bank is a surprising and has a huge impact on the financial industry including the crypto industry. While the FDIC has guaranteed an insured deposit, there is still a lot of information to be collected to determine how much bank savings exceeds insurance limits. Bitcoin's price drop may be the impact of this bank's failure, and market reactions to this situation remain unclear.