• Silicon Valley Bank (SVB) was one of the top banks in America for five years running prior to its closure by U.S regulators in March 2023.
• The stock price of SVB Financial Group dropped from highs of around $325 to $100 following the closure, and has had a direct, tumultuous effect on the cryptocurrency ecosystem.
• William Quigley, co-founder of Tether and former venture capitalist, shared insights with Cointelegraph following SVB’s shuttering over the weekend.
Silicon Valley Bank Closure
Silicon Valley Bank (SVB) had been rated as one of the top banks in America for five years running prior to its closure by U.S regulators in March 2023. This caused a significant fall from grace for SVB and its parent company, SVB Financial Group, who had been held in high esteem as financial institutions serving companies across a variety of industries. Just a few weeks before its closure, Forbes included SVB on their annual list of best banks in the US for five consecutive years.
Turbulent Stock Price Performance
The fallout from SVB’s closure has had a direct and tumultuous effect on the broader cryptocurrency ecosystem, including stablecoin issuer Circle whose $3.3 billion USD Coin (USDC) reserves were tied up in the bank. Data from Forbes highlights SVB Financial’s stock price performance over the past five years which hovered between highs of around $325 and lows of approximately $136 between 2018 and 2020 before hitting new highs above $700 at the end 2021. Following the closure however, SIVB’s share price dropped to as low as $100.
Insights From Former Venture Capitalist
William Quigley – co-founder of Tether and former venture capitalist – shared insights with Cointelegraph following SVB’s shuttering over the weekend after having experience as an auditor of failed banks over 10 year period.. According to Quigley, it has been known since December 2022 that there were serious issues regarding compliance problems at Silicon Valley Bank but despite this it was allowed to remain open until March 2023 when it finally closed its doors under Federal Deposit Insurance Corporation control .
Circle Stablecoin Turbulence
The USDC token depegged from its $1 mark as a result but has since clawed back towards parity with its fiat-based peg thanks to aggressive buying activity by Circle’s own market makers who are attempting to restore faith in USDC’s value proposition.. In addition ,Circle have also stated that they will attempt to retrieve funds from other financial institutions that can take custody of their user funds .
Overall , this episode is yet another example demonstrating why crypto custodians must be carefully chosen due diligence must be performed when selecting them . It also shows how compliant banking services are necessary for crypto companies if they are going to appeal beyond traditional investors .