SVB Crisis: Crypto Industry at Risk of Major Shakeup
• Silicon Valley Bank (SVB) is facing huge liquidity issues after announcing a $1.75 billion stock offering and a $500 million common stock purchase by private equity firm General Atlantic.
• This poses a significant risk to the crypto industry, as many crypto-friendly venture capital firms bank with SVB.
• Crypto VCs are advising their portfolio companies to withdraw funds from SVB, but there aren’t many options left where to move the funds.
What Is Silicon Valley Bank?
Silicon Valley Bank (SVB) is a top 20 bank in the U.S., with about $200 billion in assets under management (AUM). It is known for its dominance in the U.S. startup world and providing banking services to crypto-focused venture capital firms such as Sequoia and Andreessen Horowitz (a16z).
Liquidity Issues at Silicon Valley Bank
The bank has recently announced a $1.75 billion stock offering and a $500 million common stock purchase by private equity firm General Atlantic to shore up its balance sheet due to liquidity issues caused by historically fast interest rate hikes in the U.S.. As result, its shares went down 60.41% on Thursday and further 62% on Friday’s premarket session, according to data from Yahoo! Finance, trading at $39.49 per share now, while some users report not being able to log into their accounts anymore.
Risk for Crypto Industry
The potential collapse of Silicon Valley Bank poses a significant risk to the crypto industry, especially crypto-friendly venture capital (VC) firms that have been banking with them for years now – Mechanism Capital, Eden Block, Pantera Capital among others already sound the alarm bell about SVB and advise their portofolio companies to withdraw fuds from this troubled bank quickly before it gets worse – however there are few other options left where they can move these funds too safely instead of leaving them at this institution any longer .
Closure of Silvergate
Despite trying times for banks that provide banking services for cryptocurrency companies – just one day prior another crypto-friendly bank Silvergate was forced to shut down due to experiencing a bank run following FTX blowup – SVB’s troubles draw even more attention as it’s one of most crypto-friendliest banks in the world so far .
The potential demise of Silicon Valley Bank could mean serious trouble for both traditional finance sector as well as entire digital currency ecosystem itself – while we cannot be sure yet what long term implications this event will have on cryptocurrency market overall , we can say it would definitely lead into developing different approaches towards supporting such innovative projects as well as making sure that these kinds of situations won’t happen again anytime soon .