Overview of Silicon Valley Bank Troubles:
• Silicon Valley Bank, a top 20 bank in the U.S. with about $200 billion in assets under management, is facing huge liquidity issues.
• The potential collapse of Silicon Valley Bank poses a significant risk to the crypto industry, especially crypto-friendly venture capital (VC) firms.
• Crypto VCs are advising their portfolio companies to withdraw funds from the troubled bank due to its uncertain future.
Uncertain Future for Silicon Valley Bank
Silicon Valley Bank is experiencing a liquidity shock and has announced a $1.75 billion stock offering this week and a $500 million common stock purchase by private equity firm General Atlantic to shore up its balance sheet. As a result, its share price went down 60.41% on Thursday and an additional 62% on Friday’s premarket session. Moreover, some users report not being able to log in to their accounts at this time.
Impact on Crypto Industry
The potential demise of Silicon Valley Bank would mean serious trouble for the U.S. startup landscape as well as for the crypto industry since it is one of the most crypto-friendliest banks out there and provides banking services to several crypto-focused venture capital firms such as Sequoia and Andreessen Horowitz (a16z). This is why many crypto VCs have advised their portfolio companies to withdraw funds from this troubled bank due to its uncertain future prospects.
Liquidity Issues Explained
Silicon Valley Bank has around $200 billion in assets under management (AUM), of which $116 are securities and about $80b of that are high quality liquid assets that could be sold or repo’d for cash.. However, recent fast interest rate hikes in the U.S., which exposed underlying liquidity issues, cause it great trouble when it comes to meeting short term obligations out of these liquid assets alone without having enough actual cash available at hand or via credit lines with other banks or lenders like JPMorgan Chase & Co., Citigroup Inc., Goldman Sachs Group Inc., etc..
Conclusion
The troubles faced by Silicon Valley Bank have far reaching implications for both startup scene and crypto industry due to its wide range of services offered to startups as well as venture capital firms involved in cryptocurrency projects . Therefore, all parties should take note of these events and act accordingly when dealing with such institutions going forward