Contagion Fear: Silicon Valley Bank Collapse May Trigger Global Startup Wipe-Out Tsunami!


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According to a Reuters report, the U.S. financial sector and the startup scene are shaken by the sudden death of the Californian Silicon Valley Bank (SBV). The contagion fear reaches global dimensions. Financial industry executives, investors, and founders are concerned that the SBV collapse could result in a domino effect on other regional banks and startups. The regulators are urged to intervene to avoid a massive wave of startup wipe-out.

The New 2008

Startup-focused lender SVB with $209 billion in assets, became the largest bank to fail since the 2008 financial crisis. As reported, the institute was placed under the control of the California regulator DFPI on Friday. According to a report by the regulator, the bank was reportedly healthy until Wednesday, and it was only the bank run on Thursday and Friday that reportedly led to the sudden death of SBC.

The Federal Deposit Insurance Corporation (FDIC), the appointed receiver, was trying to find another bank over the weekend that would be willing to merge with Silicon Valley Bank, people familiar with the matter said on Friday.

The Global Contagion

SVB had branches in China, Denmark, Germany, India, Israel, and Sweden. Founders are warning that the bank’s failure could wipe out startups worldwide without government intervention. SVB’s joint venture in China, SPD Silicon Valley Bank Co., sought to calm local clients overnight by reminding them that operations have been independent and stable.

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SVB severely impacts many Chinese funds and tech start-ups, as the collapsed institution was a key funding bridge for groups operating between China and the US. The bank played a big role in China’s dollar-based ecosystem for funding fledgling companies, the Financial Times reports.

Startup founders in California’s Bay Area are panicking. They need access to their money to pay their employees. Fears of contagion have reached Canada and Europe. SVB’s unit in the UK is set to be declared insolvent, has already ceased trading, and is no longer taking new customers. On Saturday, more than 250 UK tech companies leaders sent a letter calling UK Chancellor Jeremy Hunt to intervene.

FinTelegram has reported that the crypto industry was also massively affected by the SVB collapse. Circle had $3.3 billion in assets that were supposed to cover its stablecoin USD Coin (USDC) deposited with SVB. The USDC then briefly collapsed but has since recovered and is trading at just under a dollar.

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USDC Stablecoin Issuer Circle Provided Statement Of Impact Of SBV Collapse!

USDC Stablecoin Issuer Circle Provided Statement Of Impact Of SBV Collapse!

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