The SVB Fallout: Why and How It Happened and What It Means for the Future of Banking

Silicon Valley Bank (SVB) was one of the largest and most influential banks in the United States, especially in the tech and venture capital sector. It had more than $100 billion in assets, over 3,000 employees, and served thousands of clients ranging from startups to Fortune 500 companies. However, on March 10th, 2023, SVB was shut down by regulators in the biggest bank failure since Washington Mutual in 2008.

The main reason behind SVB’s collapse was its exposure to the volatile cryptocurrency market. According to its latest financial report, SVB had invested about $20 billion in various digital assets, including Bitcoin, Ethereum, and several altcoins. This represented about 20% of its total assets, making it one of the most crypto-heavy banks in the world.

SVB’s strategy was to leverage its expertise and connections in the tech industry to capitalize on the growing demand and innovation in the crypto space. It offered various services to its clients related to crypto trading, custody, lending, and payments. It also partnered with several crypto platforms and exchanges to facilitate transactions and access liquidity.

However, this strategy backfired when the crypto market experienced a massive crash in early March 2023. The crash was triggered by a series of events that undermined investor confidence and sparked a panic sell-off. These events included: