Tag: SILICON VALLEY BANK

Report: US Banks Face Satisfaction Paradox, Following Silicon Valley Bank Collapse

by Blockchain News

A recent Banking Disruption Index by global digital transformation company GFT has shed light on a contrasting sentiment among US banking customers. The study reveals that while 42% of US consumers are content with their banking services, a significant 58% feel there’s room for improvement.

The research, which encompassed 2,000 US consumers and an additional 10,000 from countries including the UK, Germany, Italy, Japan, and Poland, suggests that US banks, despite enjoying higher satisfaction rates than their global counterparts, face challenges in fully meeting customer expectations.

In the evolving financial landscape marked by the rise of fintechs and digital challengers, even established banks are reassessing their strategies. This introspection has been intensified by events like the collapse of Silicon Valley Bank, raising concerns about the industry’s resilience.

Interestingly, despite the evident satisfaction disparity, a mere 14% of global consumers are contemplating a shift from their current banks, with a solid 70% showing no inclination to change. Trust, it seems, remains a cornerstone, with 78% of consumers still placing their confidence in traditional banking institutions.

The study also delves into the nuances of customer satisfaction across countries. For instance, German consumers appear less content, with 5% expressing significant dissatisfaction. This is in contrast to 2% in both the US and UK, 3% in Italy, and 1% in Japan and Poland.

Regulatory frameworks play a pivotal role in shaping consumer trust. The Banking Disruption Index underscores a correlation between Americans’ relative satisfaction with their banks and their trust levels. Notably, 50% of the surveyed Americans mentioned that their trust in banks has remained consistent over the past year, with 28% indicating an uptick in trust.

The report also touches upon the concept of open banking. While globally, 52% of consumers are familiar with the term, a significant 76% don’t recognize its direct benefits. Marco Santos, CEO Americas at GFT, emphasized the potential of regulated programs to reinforce the banking sector’s stability.

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US Bank Failures Shock Regulators

by Blockchain News

Regulators in the United States have been prompted to re-evaluate their supervision after the high-profile failures of Signature Bank, Silicon Valley Bank (SVB), and Silvergate Bank. The New York Department of Financial Services (NYDFS) and the US Federal Reserve Board have both published their internal reviews on the handling of the failures, which occurred in March.

SVB was closed by California regulators on March 10, and Signature Bank was moved against by the NYDFS on March 12. Silvergate Bank had announced its voluntary liquidation on March 8, setting off runs on the banks. The string of bank failures sent shockwaves through the financial industry, with U.S. President Joe Biden even feeling the need to tweet a response.

The Fed review of SVB’s failure found that the bank’s management failed to manage its risks, and supervisors “did not fully appreciate the extent of the vulnerabilities” of the bank as it “grew in size and complexity.” The report noted that “SVB’s foundational problems were widespread and well-known.”

The NYDFS review of Signature Bank’s failure highlighted areas where the regulator’s supervision could have been more effective. The report noted that the bank’s risk management and compliance programs were not adequate, and that the bank had a “lack of clarity” on its risk appetite.

The failures of these banks have prompted US regulators to re-evaluate their supervision of financial institutions. The NYDFS and the Fed have both acknowledged the need for improvements in their supervision and have pledged to take action to strengthen their oversight.

The failures have also raised concerns about the risks associated with banks that are friendly towards cryptocurrency. Both SVB and Silvergate Bank were known for their crypto-friendly policies, and some have speculated that their failures may be linked to their exposure to the volatile cryptocurrency market.

Overall, the failures of Signature Bank, SVB, and Silvergate Bank have highlighted the need for stronger regulatory oversight of financial institutions. While the NYDFS and the Fed have acknowledged the need for improvements in their supervision, it remains to be seen whether these improvements will be enough to prevent future bank failures.

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First Citizens Bank to Acquire Silicon Valley Bank Deposits and Loans

by Blockchain News

First Citizens Bank, a North Carolina-based bank, is set to acquire Silicon Valley Bank’s deposits and loans following the latter’s collapse in March 2023. The Federal Deposit and Insurance Corporation (FDIC) approved the purchase and assumption agreement, which includes the acquisition of $72 billion of Silicon Valley Bridge Bank, National Association’s assets at a discount of $16.5 billion. The agreement also stipulates that 17 former branches of Silicon Valley Bank will operate as First Citizens Bank and Trust Company starting on March 27.

As part of the agreement, all Silicon Valley Bank depositors will automatically become depositors of First Citizens Bank. The FDIC will keep approximately $90 billion in securities and other assets in receivership for disposition. In addition, the FDIC will receive equity appreciation rights in First Citizens BancShares, Inc. common stock worth up to $500 million.

First Citizens Bank is now the 30th largest commercial bank in the US, with $167 billion in total assets and $119 billion in deposits as of March 10. The acquisition of Silicon Valley Bank’s deposits and loans is expected to boost the bank’s assets and expand its operations in California’s tech hub.

Silicon Valley Bank collapsed on March 10 after rumors of a severe liquidity crisis sparked a bank run. The FDIC was then appointed as the receiver of the failed bank and attempted to auction off the fallen bank’s assets. The process included two separate auctions for Silicon Valley Bank’s assets: one for its traditional deposits unit and the other for its private bank, which catered to high-net-worth individuals and was housed within its retail operations.

Several firms were reportedly planning or had submitted bids for Silicon Valley Bank. First Citizens Bank was one of them, with reports suggesting it had been planning a bid as early as March 18. Three days later, the bank reportedly submitted a bid for all of Silicon Valley Bank. A First Citizens spokesperson declined to comment on “market rumors or speculation” at the time. Valley National Bancorp was also understood to have submitted a bid for the collapsed bank.

Meanwhile, Citizens Financial Group, another US regional bank, was reportedly preparing to submit an offer for Silicon Valley Bank’s private banking arm. The bank’s collapse highlights the challenges faced by banks in the tech industry and the importance of maintaining adequate liquidity. The acquisition by First Citizens Bank underscores the bank’s confidence in the US banking system and its ability to weather crises.

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Federal Regulators Testify on Bank Failures

by Blockchain News

Representatives from the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve will provide testimony about the failure of two major banks, Silicon Valley Bank and Signature Bank, at an upcoming hearing that has just been announced by the United States House Financial Services Commission. Legislators are attempting to comprehend the factors that contributed to the failure of these institutions. The hearing is set to take place on March 29, and it will contain evidence from the head of the FDIC as well as the vice chair of supervision for the Fed.

The Silicon Valley Bank was forced to close its doors on March 10 as a result of a run on the bank by its large depositors. The majority of uninsured depositors who had more over $250,000 were covered by the government once they stepped in. On the other hand, it was claimed that Signature Bank did not have any problems with its solvency at the time of its closure on March 12. The FDIC was nonetheless given responsibility of the firm’s insurance procedure by New York’s regulatory authorities.

A report on the supervision and regulation of Silicon Valley Bank by the Federal Reserve is going to be published soon by Michael Barr of the Federal Reserve. According to recent reports, the Department of Justice and the Securities and Exchange Commission have both opened investigations into allegations that some officials at the bank sold shares in the weeks running up to the institution’s shutdown.

Some MPs have indicated that exposure to crypto businesses may have played a part in the failure of the banks, while supporters in the industry have maintained that government officials were attempting to “de-bank” crypto and blockchain enterprises. The House Committee on Financial Services has indicated that it plans to conduct additional hearings about this matter.

It is important to note that Silicon Valley Bank is not connected in any way to Silicon Valley Bank Group, also known as SVB Financial Group. SVB Financial Group is a publicly listed firm that specializes in providing financial services to enterprises in the technology and life science industries. On the other hand, Signature Bank is a commercial bank that provides an extensive range of services and is principally active in the state of New York.

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NFT Trading Volumes Plunge After Silicon Valley Bank Collapse

by Blockchain News

Non-fungible tokens, or NFTs, have been a hot topic in the crypto and art worlds lately, with some NFT artworks selling for millions of dollars. NFTs are unique digital assets that are authenticated on a blockchain, giving them a certain level of rarity and value. However, the collapse of Silicon Valley Bank has had a significant impact on the NFT market, with trading volumes and sales counts plummeting.

Silicon Valley Bank is a major US bank that provides banking and financial services to technology and life science companies. Its collapse on March 10 sent shockwaves through the financial industry and caused fear and uncertainty among traders, including those in the NFT market. The drop in NFT trading volumes from $74 million to $36 million, as reported by DappRadar, shows how much the market was affected by the bank’s collapse. This decline in trading volume was accompanied by a 27.9% drop in daily NFT sales count between March 9 and March 11.

The decrease in NFT trading volumes and sales counts is a cause for concern, as it indicates a lack of confidence in the market. Traders are understandably worried about the potential repercussions of a major US bank going under, and this has led many to flee the market altogether. The low number of active NFT traders on March 11, at just 11,440, was the lowest recorded since November 2021, which further illustrates the impact of the bank’s collapse.

This setback for the NFT market comes at a time when the industry has been gaining significant attention and traction. The market for NFTs has exploded in recent months, with artists, musicians, and athletes all jumping on the bandwagon. However, the NFT market is still relatively new, and events like the collapse of Silicon Valley Bank serve as a reminder of its volatility.

It is worth noting that the NFT market is not the only one affected by the collapse of Silicon Valley Bank. The bank’s clients in the technology and life science sectors are also feeling the impact, as they may have difficulty accessing funds and financing. The bank’s collapse may also have wider implications for the broader financial industry, as it raises questions about the stability of the banking system.

Despite the recent setback, there is reason to believe that the NFT market will recover. The market has shown resilience in the face of previous challenges, and it is likely that traders will return once the dust settles. However, the industry will need to address the concerns raised by the collapse of Silicon Valley Bank and work to build confidence and stability in the market.

In conclusion, the collapse of Silicon Valley Bank has had a significant impact on the NFT market, with trading volumes and sales counts dropping sharply. This setback serves as a reminder of the volatility of the NFT market and raises concerns about its stability. However, the market has shown resilience in the face of previous challenges, and it is likely that it will recover in due course. The industry will need to address the concerns raised by the bank’s collapse and work to build confidence and stability in the market moving forward.

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Circle’s Stablecoin USDC Affected by Collapsed Bank

by Blockchain News

Circle CEO and co-founder Jeremy Allaire revealed that the stablecoin issuer had been able to access its $3.3 billion in funds held with Silicon Valley Bank since March 13. Allaire stated that he believed that almost everything was able to clear from the failed lender. However, USDC briefly de-pegged following news of the temporarily locked funds, leading to a drop in the stablecoin’s market cap by almost 10% since March 11.

USDC’s dollar peg has since recovered, but mass redemptions have affected its market cap. In contrast, USDC’s peer, Tether, has recorded a slight increase in its market cap since March 11, climbing over 1% to $73.03 billion. Although the temporarily locked funds represented less than 8% of the token’s reserves, it had a significant effect on USDC.

The January reserve report released on March 2 asserted that USDC was over 100% collateralized, with over 80% of the reserve consisting of short-dated United States Treasury Bills, which are highly liquid assets that are direct obligations of the U.S. government and considered one of the safest investments globally. Despite the impact of the collapsed bank, the reserve report provides assurance that USDC remains backed by highly liquid assets and overcollateralized.

USDC is one of the most widely used stablecoins in the cryptocurrency market, with a market cap of over $10 billion as of March 2023. Stablecoins are a type of cryptocurrency that is pegged to the value of a fiat currency, usually the U.S. dollar, and are designed to provide a stable store of value that can be used for transactions without the volatility typically associated with other cryptocurrencies like Bitcoin.

The news of the temporarily locked funds at Silicon Valley Bank highlights the potential risks associated with stablecoins, which are often seen as a safer alternative to other cryptocurrencies due to their stable value. However, the fact that these coins are backed by fiat currency reserves means that they are only as safe as the financial institutions that hold those reserves.

In recent years, there have been several high-profile cases of stablecoin issuers facing regulatory scrutiny or experiencing issues with their banking partners. For example, in 2018, Tether, the largest stablecoin issuer at the time, faced allegations that its reserves were not fully backed by U.S. dollars as it had previously claimed. Similarly, in 2021, the stablecoin issuer Centre, which is backed by Coinbase and Circle, faced a lawsuit alleging that it had violated securities laws by failing to register its USDC stablecoin with the U.S. Securities and Exchange Commission.

Despite these challenges, stablecoins have become an essential part of the cryptocurrency ecosystem, providing a way for traders and investors to move funds between exchanges and participate in decentralized finance (DeFi) applications without the risks associated with traditional fiat currencies.

In response to the risks associated with stablecoins, regulators around the world are increasingly taking steps to provide more oversight and regulation of these assets. For example, in the U.S., the SEC has signaled that it may consider stablecoins to be securities, which would subject them to greater regulatory scrutiny. Similarly, in the EU, regulators have proposed new rules for stablecoins that would require issuers to be authorized and subject to ongoing supervision.

In conclusion, the news of Circle’s temporarily locked funds at Silicon Valley Bank highlights the potential risks associated with stablecoins, but the fact that USDC remains overcollateralized with highly liquid assets provides some reassurance to investors. As stablecoins continue to play a critical role in the cryptocurrency ecosystem, it is likely that regulators will continue to scrutinize these assets and develop new rules to ensure their safety and stability.

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US DOJ and SEC launch inquiries into Silicon Valley Bank collapse

by Blockchain News

The sudden collapse of Silicon Valley Bank (SVB) has attracted the attention of the US Department of Justice (DoJ) and Securities and Exchange Commission (SEC), who have launched investigations into events leading up to the bank’s closure. According to sources, the probes will scrutinize the stock sales made by SVB financial officers in the weeks before the bank’s collapse, as well as the events that led to its failure.

Reports suggest that SVB’s CEO, Greg Becker, and chief financial officer, Daniel Beck, sold shares just two weeks before the bank’s collapse, outraging some observers. Becker reportedly sold $3.6 million worth of shares on February 27, while Beck sold $575,180 in stocks on the same day. In total, SVB executives and directors cashed out $84 million worth of stock over the past two years.

The investigations are in their early stages and may not lead to charges or allegations of wrongdoing, according to sources. However, a formal announcement from the DoJ is expected in the coming days, says another person with direct knowledge of the situation.

In addition to the investigations by the DoJ and SEC, the US Federal Reserve is also looking into how it supervised and regulated SVB before its collapse.

SVB Financial Group, SVB’s parent organization, and two executives were sued by shareholders on March 13. The lawsuit accuses them of failing to disclose how rising interest rates would leave the bank “particularly susceptible” to a bank run. The lawsuit seeks damages for SVB investors from June 16, 2021, to March 10, 2023.

The collapse of SVB has sent shockwaves through the financial industry, prompting warnings from the SEC about potential violations of US securities laws. The investigations by the DoJ and SEC are expected to shed more light on the events that led to the bank’s collapse and the stock sales made by its financial officers.

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SVC Bank Caught in SVB Collapse Confusion

by Blockchain News

The recent collapse of Silicon Valley Bank (SVB), a major banking institution based in California, has sent shockwaves throughout the global financial sector. While countless businesses have been directly affected by the bank’s downfall, a bank in India with no connection to SVB has also felt the consequences of the crisis due to a simple mix-up in acronyms.

Shamrao Vithal Co-operative Bank (SVC Bank), a 116-year-old cooperative bank based in Mumbai, India, found itself caught in the line of fire when the news of SVB’s imminent shutdown began to spread on March 10. The similarity between the short forms of the two banks, SVB and SVC Bank, led to confusion among some Indian citizens, who mistakenly associated the Indian bank with the crisis in the United States.

Silicon Valley Bank has been a significant player in the banking industry, particularly in the technology and startup sectors. Founded in 1983, SVB has been a crucial financial partner to various emerging tech companies and venture capital firms. The bank’s collapse has raised concerns over the stability of the financial sector and the impact it may have on businesses tied to the bank.

In contrast, Shamrao Vithal Co-operative Bank has a long-standing history in India, having been established in 1907. As a cooperative bank, it focuses on serving the needs of its members and promoting financial inclusion in the country. SVC Bank offers a wide range of financial products and services, including savings accounts, loans, and insurance. The bank has successfully navigated numerous financial challenges throughout its history and remains an important institution in the Indian banking sector.

Despite the clear differences between the two banks and their respective markets, the confusion caused by the similarity in their acronyms led to panic among some SVC Bank customers. As a result, the Indian bank was forced to clarify its position and reassure its customers that it was not connected to the crisis unfolding in the United States.

This incident highlights the potential for misunderstandings in an increasingly interconnected world, where news spreads rapidly across borders, and even a minor mix-up can have significant consequences. It serves as a reminder for both financial institutions and the public to be vigilant in verifying information and understanding the differences between seemingly similar entities.

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Bitcoin’s Market Cap Surpasses Meta’s Despite Turbulent Week for Crypto

by Blockchain News

Bitcoin, the world’s most popular cryptocurrency, has managed to flip the market cap of tech giant Meta, despite a turbulent week for the crypto market following the downfall of Silicon Valley Bank (SVB) and Signature Bank. According to Companies Market Cap, Bitcoin’s market cap has reached $471.86 billion, surpassing Meta’s $469 billion.

Companies Market Cap provides real-time monitoring and ranking of market caps for cryptocurrencies, public companies, precious metals and exchange-traded funds. Only 24 hours earlier, BTC’s market cap was nearly $37 billion below Meta’s, sitting at $433.49 billion. However, Bitcoin’s market cap rose 9.7% in the past 24 hours, pushing the cryptocurrency to sit in the 11th spot among top assets by market cap, just below electric vehicle maker Tesla.

The crypto market has been experiencing a lot of turmoil lately, with the downfall of SVB and Signature Bank causing significant drops in the market. SVB, a key player in the cryptocurrency space, announced that it was shutting down all of its crypto-related accounts, while Signature Bank was sued by the New York Attorney General for allegedly facilitating money laundering for a cryptocurrency exchange.

Despite these setbacks, Bitcoin has managed to bounce back and surpass Meta’s market cap. The gap between the two market caps is now more than $20 billion, though it still is quite a distance from gold, which sits in first position with a $12.59 trillion market cap, followed by Apple in second place with a $2.380 trillion market cap.

Bitcoin’s price has risen 8.72% in the past 24 hours, sitting at $24,441. This price surge could be attributed to various factors, such as increased institutional adoption of Bitcoin and positive sentiment around the crypto market in general.

Bitcoin has been gaining popularity among investors and companies alike, with Tesla investing $1.5 billion in the cryptocurrency earlier this year. Other major companies, such as Square and MicroStrategy, have also invested heavily in Bitcoin as a hedge against inflation and a potential store of value.

Despite its popularity, Bitcoin still faces significant challenges, such as regulatory uncertainty and concerns around energy consumption. Many countries are still grappling with how to regulate cryptocurrencies, which could impact the market’s growth and adoption.

Additionally, Bitcoin’s energy consumption has been a topic of controversy, with some critics arguing that the amount of energy used to mine and transact the cryptocurrency is unsustainable and harmful to the environment. However, proponents of Bitcoin argue that its energy consumption is necessary to maintain the security and decentralization of the network.

In conclusion, Bitcoin’s market cap surpassing Meta’s despite the turbulent week for crypto is a positive sign for the cryptocurrency market. However, it still faces significant challenges that could impact its growth and adoption in the future.

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Overnight collapse of two traditional banks triggers chaos

by Blockchain News

On March 11, the financial world was rocked by the sudden collapse of two major traditional banks, Silicon Valley Bank and Signature Bank. This triggered a series of events that impacted millions of businesses, venture capitalists, and bottom-line investors alike. One of the most significant effects of this collapse was the depegging of several stablecoins, including USD Coin (USDC), USDD (USDD), and Dai (DAI), from the U.S. dollar. Circle, the company that issues USDC, announced that $3.3 billion of its $40 billion reserves were stuck in SVB, causing the depegging of the stablecoins.

This news sent shockwaves through the financial community, and many worried about the potential fallout from the collapse of these banks. However, United States President Joe Biden quickly stepped in to reassure taxpayers that they would not feel the burn. The federal government took swift action to protect depositors, ensuring that they would not lose their money as a result of the banks’ collapse.

Biden also made it clear that those responsible for the banks’ collapse would be held accountable. He vowed to investigate the matter thoroughly and take action against anyone found to be responsible. This announcement was welcomed by many in the financial community, who had feared that the collapse of these banks would go unpunished.

The collapse of Silicon Valley Bank and Signature Bank was a significant event in the financial world. These banks were both well-established institutions with many clients and significant assets. The sudden collapse of these banks had far-reaching consequences, and many businesses and individuals suffered losses as a result.

However, the fallout from this event was not limited to those directly impacted by the banks’ collapse. The depegging of stablecoins from the U.S. dollar caused significant disruption in the cryptocurrency market. Stablecoins are widely used as a way to move money quickly and cheaply between different exchanges and platforms. When stablecoins depegged from the U.S. dollar, this caused significant uncertainty and volatility in the cryptocurrency market.

Overall, the collapse of Silicon Valley Bank and Signature Bank was a wake-up call for the financial industry. It highlighted the importance of strong regulation and oversight to prevent such events from happening in the future. While the federal government’s swift action helped to mitigate the damage caused by the banks’ collapse, there is still much work to be done to ensure the stability and resilience of the financial system as a whole.

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