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Coinbase CEO Reflects on Banking Facilities After the Silicon Valley Bank Crisis

BusinessCryptoCoinbase CEO Reflects on Banking Facilities After the Silicon Valley Bank Crisis
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As the wider cryptocurrency community continues to debate the ongoing fallout following the closure of three major US banks, calls for neobank services for the industry are on the cards.

Silicon Valley Bank (SVB), which has traditionally served startups in a number of innovation sector industries, was closed March 10 by the California Department of Financial Protection and Innovation.

The reasons for the closure are still emerging but the news sent shockwaves through the industry. primarily driven by USD Coin (usdc) Issuer Circle has more than $3.3 billion of its $40 billion in reserves locked up in the bank.

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Signature Bank, which also serves some cryptocurrency firms, followed a similar fate. March 12, The New York Department of Financial Services (NYDFS) took over the bank to prevent further bank runs as customers wanted to withdraw funds from SVB and Signature.

The shutdown of SVB was particularly difficult, as the USDC stablecoin briefly lost its $1 peg, driven by great uncertainty surrounding the impact on Circle’s ability to manage risk redemptions.

RELATED: The Silicon Valley Bank Collapse: Everything That Happened So Far

usdc seen its peg crawling Circle CEO Jeremy Allaire announced that the stablecoin issuer has lined up new banking partners as of March 13 in the United States.

Given the turmoil of the past few days, the cryptocurrency ecosystem is now taking a closer look at relationships with traditional financial institutions that service fiat currency deposits, withdrawals, and money flows.

Coinbase CEO Brian Armstrong said on Twitter on March 13 that the US cryptocurrency exchange has previously considered features that could potentially serve to bypass or bridge the gap experienced in the latest mainstream banking failure.

Ryan Lackey, CSO of crypto insurance company Evertus, questioned whether the exchange had considered offering neobanking services to high-net-worth individuals and businesses:

Armstrong replied by saying that Coinbase would need to add several features and opened the door to comments in the thread:

“Certainly we have given some thought. There needs to be some more features like outbound wire, multi-user support etc. Non-fractional reserve “banking” certainly looks more attractive now.

coinbase Confirmed It said it had about $240 million in Signature Bank as of March 10, but expects to recover all of its corporate cash holdings.

The closures of SVB and Signature Bank sparked fears of a widespread run on regional banks across the United States over the weekend. A. Bloomberg reports It also suggests that the United States Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) are weighing the creation of a fund to cover deposits in sick banks.