Silicon Valley Bank and Signature Bank depositors will receive their cash on Monday. The announcement was made by Federal Reserve Chairman Jerome Powell, Treasury Secretary Janet Yellen, and FDIC Chairman Martin Gruenberg. According to a news statement, President Joe Biden advised the move, which will not cost U.S. taxpayers.
The joint statement noted that post-2008 banking laws “ensured improved safeguards for the banking industry” and that “the U.S. banking sector remains resilient and on a sound foundation.”
.Last Wednesday, Silvergate announced its voluntary liquidation and complete depositor refund. The bank also planned to end the Silvergate Exchange Network (SEN).
Crypto-native enterprises relied on Silvergate’s 24/7 SEN payment service. Signature Bank’s Signet technology lets clients make real-time payments. Silvergate and Signature were both popular among crypto-native enterprises, but Signature’s $110 billion in assets dwarfed Silvergate’s $11 billion as of the end of last year.
The combined declarations raised cryptocurrency prices. According to CoinGecko, Bitcoin and Ethereum rose 7.2% and 8.2% to $21,850 and $1,580, respectively, over the past day.
After Silicon Valley Bank collapsed, stablecoin USDC recovered its peg to the U.S. dollar. As Circle revealed that $3.3 billion of USDC’s reserves were with the failing bank, the token’s price plummeted to $0.87.
The crypto-friendly bank’s senior management has been dismissed, but depositors will be safeguarded when the organization reopens Monday. Shareholders and “some unsecured debtholders” will not. The Federal Reserve Board said Sunday that qualifying depository institutions will receive additional money to address depositor needs.
The Federal Reserve noted in a press statement that the measures will eliminate “an institution’s need to promptly liquidate [high-quality] securities in times of stress.”
In a separate statement, the Federal Reserve Board described its Bank Term Financing Program (BTFP), which provides bank loans of up to one year to qualifying institutions in exchange for U.S. Treasuries and other assets. “These efforts will relieve stress across the financial system, support financial stability, and limit any impact on enterprises, families, taxpayers, and the broader economy,” the statement stated.