- Coinbase CEO Brian Armstrong has discussed the potential of providing cryptocurrency services in response to the closure of Silicon Valley Bank (SVB) and Signature Bank.
- The news of SVB’s closure caused a scramble for financial assets held at the bank, particularly for Circle who had $3.3 billion of its $40 billion reserves locked up with the service
- The fallouts from SVB and Signature Bank have revealed underlying issues with digital asset custodial services, prompting more companies to explore alternative solutions with greater security and autonomy.
Coinbase CEO Brian Armstrong has taken to Twitter to discuss the potential of providing cryptocurrency services in response to the closure of Silicon Valley Bank (SVB) and Signature Bank. Armstrong said that Coinbase had previously considered offering features that could bypass or bridge gaps exposed by mainstream banking issues, such as outbound wires, multi-user support, and non-fractional reserve “banking” services.
After Evertas Insurance CSO asked Armstrong about setting up Coinbase as an “HNW + business neobank,” he said,
“Definitely something we’ve thought about. Need a few more features like outbound wires, multi-user support, etc. Non-fractional reserve “banking” is looking more attractive right now.”
The news of SVB’s closure caused a scramble for financial assets held at the bank, mainly for Circle, which had $3.3 billion of its $40 billion reserves locked up with the service. This further prompted high net-worth individuals and businesses to take a closer look at ties with traditional finance institutions leading Armstrong to comment on the matter.
At present, Coinbase confirmed that it had around $240 million held at Signature Bank but expects to recover all of its cash holdings. In addition, Bloomberg reports suggesting that a fund may be created by The United States Federal Reserve and Federal Deposit Insurance Corporation to cover deposits at other struggling banks.
The ripple effects of the bank closure continue to be felt across the cryptocurrency industry, with temporary market fluctuations caused by suspended transactions and a lack of clarity surrounding what will happen to funds held at SVB and Signature Bank.
The uncertainty has also impacted digital asset custody services, with some firms needing more access to these banking services. Coinbase confirmed it is exploring alternative avenues, such as self-custodial solutions and additional partnerships to reduce reliance on traditional banks.
Amidst the chaos brought on by the closures, Coinbase CEO Brian Armstrong aims to ensure that crypto community members can continue accessing services safely and securely.
Though no concrete steps have been taken yet, Armstrong’s words have been noticed as entrepreneurs, investors, and developers consider potential solutions for crypto banking after Silicon Valley Bank’s demise. The next few weeks will bring new developments for users as some companies rush to fill the gap left behind.
Bitcoin Rises After Bank Closures
Miraculously, Bitcoin hit a bottom of $19,000 after SVB and Signature Bank closed. In just a few days, BTC returned to more than $1 trillion in market cap – one of the fastest recoveries in recent history.
Despite the positive news surrounding BTC’s return to peak performance, investors must still be wary of traditional banks’ stability and long-term viability. The fallouts from SVB and Signature Bank have highlighted some underlying issues surrounding digital asset custodial services and the industry.
Given recent events, the coming days will be an exciting watch regarding neobank development prospects within crypto and what actions Coinbase may take. Indeed, the failure of Silicon Valley Bank could prove instrumental as more companies consider transitioning away from traditional banking systems towards alternative solutions with greater security and autonomy.