After the recent shutdown of Silicon Valley Bank (SVB) by the California Department of Financial Protection and Innovation, which has shaken the United States financial system, multiple large companies have reported their exposure to the now-collapsed bank.
Indeed, the companies that have disclosed their exposure with SVB include major names from different industries, such as Circle, BlockFi, Payoneer, Roku, and Roblox (NYSE: RBLX), as observed by the CEO of finance media company Grit Capital Genevieve Roch-Decter on March 12.
The amount of exposure from these companies varies. For instance, Circle reported a massive $3.3 billion held in SVB, followed by Roku at $487 million and BlockFi at $227 million, placing pressure on the issuer of USD Coin (USDC), especially in the light of increased regulator scrutiny over stablecoins.
According to Circle, the reserve deposits held at SVB, which comprise about 8% of the total USDC reserve, are to be fully recovered when banks open in the U.S., as the company said in a statement on March 13. Its CEO Jeremy Allaire commented on the development:
“We are heartened to see the U.S. government and financial regulators take crucial steps to mitigate risks extending from the banking system. We’ve long advocated for full-reserve digital currency banking that insulates our base layer of internet money and payment systems from fractional reserve banking risk.”
At the same time, Ripple CEO Brad Garlinghouse has confirmed that the blockchain company had “some exposure to SVB – it was a banking partner, and held some of our cash balance” but that no disruption was expected to Ripple’s day-to-day business as it kept the majority of its USD holdings with a broader network of bank partners.
Crypto-friendly banks collapse
It should be noted that SVB is the largest bank to fail since the 2008 recession, and is only the latest victim of the industry-wide series of closures, as another crypto-friendly bank, Silvergate, shut down in early March after the wider meltdown in the cryptocurrency market drained the company’s financial strength, and sent its shares into the abyss.
More recently, regulators have also shuttered Signature Bank of New York, which is also known to cater to multiple crypto firms, citing the need to “protect the U.S. economy by strengthening confidence in our banking system,” according to the statement by the Federal Reserve on March 12.