Treasury Department, Federal Reserve, and FDIC take action, Silicon Valley bank deposits fully accessible, Signature also taken over

Following an emergency meeting over the weekend, the U.S. Department of the Treasury, the Federal Reserve, and the FDIC issued a joint statement stating that starting from Monday, March 13th, depositors will be able to withdraw all of their deposits, and any losses related to Silicon Valley Bank will not be borne by taxpayers. Another crypto-friendly bank, Signature Bank, has also been shut down by its state charter agency due to similar systemic risk issues.

Confidence Crisis, Government Takes Decisive Action

Last Friday, Silicon Valley Bank was suddenly announced to be taken over by the FDIC; stablecoin issuer Circle disclosed that $3.3 billion in reserves were held at Silicon Valley Bank; USDC was uncoupled; and there were also reports of a run on deposits at the US regional midsize bank First Republic Bank, causing market panic and fears of another financial storm.

In response to the closure of Silicon Valley Bank over the weekend, U.S. Treasury Secretary Yellen stated that bank regulators are closely coordinating to respond to the collapse of Silicon Valley Bank and protect investors. After an emergency meeting over the weekend, the U.S. Treasury, the Federal Reserve, and the FDIC issued a joint statement at 6 p.m. Eastern Time, claiming that the government is taking decisive action to enhance public confidence in the banking system to safeguard the U.S. economy. This move will ensure that the U.S. banking system can continue to play its vital role, provide deposit protection, and serve as a channel for households and businesses to access credit to promote strong and sustainable economic growth.

Starting from Monday, March 13, depositors will be able to withdraw their entire deposits, and any related losses with Silicon Valley Bank will not be borne by taxpayers.

Signature Bank Also Closed

In the statement, another crypto-friendly bank, Signature Bank, was also mentioned, as Signature Bank has been closed by its state charter agency due to similar systemic risk situations. All customer deposits remain intact, and taxpayers will not bear any losses.

Shareholders and certain unsecured creditors will not be protected. Senior bank officials have also been dismissed. As required by law, the deposit insurance fund will compensate and support any uninsured depositors for any losses incurred through a special assessment of the bank.

Government to Provide Additional Funds to Prevent Systemic Risk

To stabilize public confidence and prevent systemic risk, the Federal Reserve of the United States also announced that it will provide additional funds to eligible deposit institutions to help ensure that banks have the capacity to meet the needs of all depositors.

The Federal Reserve pledged to take necessary measures to ensure the safety of depositors' savings and to ensure that the U.S. banking system maintains a flexible and robust foundation.