The Silicon Valley Bank (SVB) collapse saga has left the Western world in an utterly bemused state. But this has set a new revolution in motion where wokeism and Crypto won’t get prioritized. How? Watch till the end.
On 10th March 2023, one of America’s most renowned bank, the Silicon Valley Bank, also known as SVB collapsed at a bewildering speed, making it the biggest such fall of a bank after the 2008 Financial crisis. Hundreds of investors are now on edge about whether its demise could spark a broader banking meltdown.
In just 48 hours of the Silicon Valley Bank (SVB) collapse, the bank lost more than $465b of its value. The situation was so grave that the US federal government stepped in to guarantee customer deposits, but SVB’s downfall continues to reverberate across global financial markets. The market turmoil caused by the Silicon Valley Bank’s failure, has led to worries that other banks may be experiencing a similar situation. Sadly, their worst nightmares have come true. On March 15, Credit Suisse also experienced a downfall, so it wouldn’t be wrong to predict that a prolonged recession is about to start.
SVB, a significant lender to startups across the US since the 1980s, was taken over by regulators after a massive runout on deposits rendered the medium-sized bank unable to survive on its own. The government has also shut down Signature Bank, a regional bank that was teetering on the brink of Silicon Valley Bank (SVB) collapse, and guaranteed its depositors.
The US President Joe Biden assured Americans on 13th of March that their banking system is secure and that “they would do whatever is needed on top of all this,” demonstrating how seriously officials are taking the SVB failure. You see, this incident has shocked the world’s economy and markets, causing some to predict that more and more fallouts will soon follow. Also, banking systems have lost some of their credibility. But, the confidence in cryptomarket has suddenly increased.
Silicon Valley Bank (SVB) collapse: The Crypto Run
As the American Banking tycoon turned into an American nightmare for holders and users of SVB, the cryptocurrency market has seen a sudden boom.
Cryptocurrency prices rose on 13th March as markets recalibrated their expectations of future rate hikes by the Federal government. Bitcoin surged 13.5% to around $24,280 and Ethereum rose 8.1% to just over $1,680, according to CoinGecko data. Meanwhile, the global cryptocurrency market cap was trading higher, around $1.02 trillion, rising 7.63% in the last 24 hours.
This indicates that there is currently more than $1T in cryptocurrency in circulation. The market’s current optimistic tone is primarily due to federal regulators’ hints that Silicon Valley Bank’s customer deposits may be recovered. The news has improved investor sentiment by promising greater market liquidity. Some have even started to predict that SVB’s collapse will eventually bring the end of Crypto Winter.
But, to be really honest? That doesn’t seem to be so likely. Because there are two more banks, that were known for dealing with cryptocurrencies and now, Federal authorities have trapped them entirely. The Signature Bank and Silvergate Bank. The demise of these so-called crypto-friendly banks raises questions about how native companies in the digital assets sector will be able to form new banking relationships.
Moreover, since the Silicon Valley Bank (SVB) collapse, the scrutiny of cryptocurrencies has only become more intense. Just last week, the New York Attorney General’s office announced a lawsuit against the cryptocurrency exchange KuCoin. Moreover, governments of several nations are also trying their best to regulate the crypto market. For instance, India recently imposed money laundering provisions on the crypto sector.
This raises the question? Is Crypto winter really ending? This claim appears to be far from truth.
Read More: NATO enters its “last lap of existence”
The collapse of ‘Woke’ Silicon Valley Bank
Regarding the Silicon Valley Bank (SVB) collapse, this may have actually sparked a new revolution—not a crypto revolution, but one that will create top-light, unapologetically transparent banking.
Nobody can dispute the fact that SVB has significantly altered its strategy for financing new businesses. It changed from being a pro-Capitalist endeavour to a full-fledged “Trudeau” bank where only wokeism was prioritised.
SVB hired a board obsessed with diversity, invested billions for ‘healthier planet‘ and held month-long Pride celebrations. But, the cracking bank had NO chief risk officer for eight months last year. Yes, you heard it right! The now-failed bank had an A rating for its Environmental, Social and Governance policies according to the MSCI index after creating its own initiatives to ‘advance inclusion and opportunity in the innovation economy’ and investing in clean energy solutions over the past few years.
It even announced that it would invest a whopping $5billion by 2027 to support sustainability efforts, while its European offices held a monthlong Pride celebration and promoted ‘safe spaces.’ The bank had also implemented ‘a diverse candidate slate for US leadership roles’ and introduced its first six Employee Resource Groups for Asian, Black, Hispanic, LGBTQ, veteran, military and female employees.
Also, it had an ESG policy similar to Blackrock’s, focusing on environmental, social, and governance factors. The “E” assessed a business’s environmental impact, such as carbon footprint and pollution. The “S” evaluated how a business treats social groups, its workforce, communities, and customers, including workplace safety and product sourcing. The “G” stands for governance and measures how well a business holds itself accountable, including executive compensation and accounting procedures.
It wouldn’t be wrong to say that SVB focussed too much on woke policies and not enough on its investments. And now, it is about to render hundreds, no probably thousands of businesses bankrupt.
Read More: EU heading towards another ‘Great Depression’
The Crypto daydreams
And so, there has been a sudden uptick in crypto banking. However, the fact remains that Crypto has almost nothing in common with traditional banking including patrons. Cryptocurrencies run on decentralised, peer-to-peer networks that do not require intermediaries, in contrast to traditional banking, which relies on a centralized system with an hierarchy of bankers, clients, and regulators. Which ultimately makes environments that are conducive to businesses, dangerous.
Traditional banks have their own policies and procedures in place to protect customers from fraud, and they are governed by governments. Additionally, they have the infrastructure needed to securely and quickly process large transactions. Customers of traditional banking can invest their money in a variety of different ways, including stocks and bonds. However, with not-so-competent people on the job, banking could turn so bad, that customers run away.
This is the sole reason why Silicon Valley Bank (SVB) collapse is getting attributed to Wokeism.
Read More: US awaits a recession. A prolonged and painful one
Any sort of decline in banking has always pushed IRS, SEC, and Federal Bank in top gear. This is the reason why the need for top light, unwoke, and transparent banking institutions that are committed to upholding ethical standards and serving their customers’ needs, not just some specific agendas. Then and only then would banks place a high priority on nondiscriminatory lending practises, fee and policy transparency, and financial literacy.
The Silicon Valley Bank (SVB) collapse serves as a reminder that the banking system needs to be completely overhauled and that it will eventually happen. As more banks and financing agencies like Credit Suisse and Signature fall, the need will just become clearer.
The hopes that Crypto will emerge from the cold and become a viable alternative are unfounded. Only those who adore cryptocurrency will remain hopeful; those who do not, will be more in tune with reality.
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