Coinbase CEO ponders banking features after Silicon Valley Bank crisis

The wider cryptocurrency assemblage continues to statement the ongoing fallout pursuing the closure of 3 large American banks, with calls for neobank services for the manufacture connected the cards.

Silicon Valley Bank (SVB), which has traditionally served startups crossed a fig of innovation assemblage industries, was shuttered by California’s Department of Financial Protection and Innovation connected March 10.

The reasons surrounding the closure are inactive coming to airy but the quality caused shockwaves done the industry, chiefly driven by USD Coin (USDC) issuer Circle having implicit $3.3 cardinal of its $40 cardinal reserves locked up successful the shuttered bank.

Signature Bank, which besides serves immoderate cryptocurrency firms, followed a akin destiny connected March 12. The New York Department of Financial Services (NYDFS) took possession of the slope to forestall further slope runs arsenic customers looked to propulsion retired funds from SVB and Signature.

The closure of SVB was peculiarly hard-hitting, arsenic the USDC stablecoin concisely mislaid its $1 peg driven by large uncertainty astir the effect Circle’s vulnerability would person connected the quality to negociate redemptions.

USDC has seen its peg creep backmost up to the $1 people aft Circle CEO Jeremy Allaire announced that the stablecoin issuer has lined up caller banking partners arsenic of March 13 successful the United States.

Given the tumult of the past fewer days, the cryptocurrency ecosystem is present taking a person look astatine ties to accepted concern institutions that service fiat currency deposits, withdrawals and monetary flows.

Coinbase CEO Brian Armstrong took to Twitter connected March 13, saying that the American cryptocurrency speech has antecedently considered features that could perchance bypass oregon service to span gaps experienced successful the latest mainstream banking failure.

Ryan Lackey, CSO of cryptocurrency security steadfast Evertas, questioned whether the speech had considered offering neobanking services to high-net-worth individuals and businesses:

Hey @brian_armstrong and @coinbase -- aft the SVB hellhole implicit the weekend, wherefore don't you acceptable up Coinbase arsenic immoderate benignant of HNW + concern neobank, with the "pass done assets to assemblage banks and treasuries" arsenic a first-class enactment successful parallel with crypto.

— Ryan Lackey (@octal) March 13, 2023

Armstrong replied saying that Coinbase would request to adhd a fig of features and opened the doorway for comments successful the thread:

“Definitely thing we've thought about. Need a fewer much features similar outbound wires, multi-user enactment etc. Non-fractional reserve "banking" is decidedly looking much charismatic close now.”

Coinbase confirmed that it had astir $240 cardinal held astatine Signature Bank connected March 10, but expects to retrieve each of its firm currency holdings.

The closure of SVB and Signature Bank caused fears of wide runs connected determination banks crossed the United States implicit the weekend. A Bloomberg report besides suggests that the United States Federal Reserve and Federal Deposit Insurance Corporation (FDIC) are weighing up the instauration of a money to screen deposits astatine ailing banks.