Brad Garlinghouse, CEO of Ripple Labs during PBWS 2022 – Coins.com
The bankruptcy of the banks Silicon Valley Bank and Signature touch the actors Web3of which Ripple. Its CEO Brad Garlinghouse recognizes a exhibitionof which he immediately qualified theimpact.
Banks, especially in Europe, still often stay away from crypto companies. This is less the case in the United States where they are more globally financial partners of startups.
The wave of withdrawals by startups has caused Silicon Valley Bank and Signature Bank to fall sharply. Problem: crypto firms, including Ripple, had accounts with these institutions.
Protecting XRP from a fall
As of Saturday, March 11, its CEO Brad Garlinghouse was speaking out about this on Twitter. Yes, the issuer of the XRP token, is “somewhat exposed” to the Silicon Valley Bankhe admitted. But no need to panic.
Garlinghouse did not fail to anticipate the consequences of such an announcement for the price of a token. Circle saw its USDC stablecoin lose its parity with the dollar and trading explode.
Part of Circle’s cash reserves were held by Silicon Valley Bank. The panic has since subsided and parity has been restored. The US authorities announced that they would support the banks, guaranteeing the deposits.
No disruption to Ripple’s business
But even before this statement from the Fed, the CEO of Ripple wanted to be reassuring, saying that the blockchain company remained “in a strong financial position.”
We do not anticipate ANY disruption to our day-to-day operations, and we already held the majority of our USD in a wider network of partner banks,” he justified.
The U.S. policy response, however, is the real lifeline for the startups concerned, including those of Web3 like Coinbase or Paxos. The reaction was quick and joint.
US authorities to the rescue of banks
Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell and FDIC Chief Martin Gruenberg announced yesterday “decisive actions”. Their goal: to protect the U.S. economy and strengthen confidence in the banking system.
All depositors of these institutions will be fully reimbursed. This guarantee applies to the Silicon Valley Bank – of which HSBC has just bought the British subsidiary – and the bank Signature.
Other promises: “no loss will be borne by the taxpayer” and access to the funds on deposit will be possible as of this Monday, March 13.
For Ripple, the risks are therefore a priori nil, at least until the expected decision of the court in the case against the SEC.