Lessons Learned from the SVB Failure for Small Businesses & The Future of Banking with Cryptocurrency
The SVB Failure and Fallout
The recent failure of Silicon Valley Bank (SVB) has caused some concern among its customers, particularly those who are small businesses. However, as one commenter pointed out, the federal government stepped in to guarantee all deposits, so there is unlikely to be any lasting fallout from the bank's collapse.
One interesting development that was reported by another commenter is that Elon Musk speculated about buying SVB as part of Twitter. This would give him banking standing to create a "super-PayPal." However, it remains to be seen whether this will come to fruition.
Lessons Learned for Small Businesses
The failure of SVB highlights an important lesson for small businesses: if you have cash assets in excess of $250K, keep them in multiple accounts/banks so that all of your cash is FDIC insured. While most small businesses may not routinely have over $250K sitting in their bank account, there are exceptions. For those businesses that do have significant cash reserves, it is prudent to spread those funds across multiple accounts to ensure full coverage.
Additionally, it's worth noting that many of the customers affected by the SVB failure were venture-backed businesses with annual revenues between $0/2.5 and $1 billion. These companies may not fit the traditional definition of a "small business," but they still face similar risks when it comes to managing their cash reserves.
The Future of Banking and Cryptocurrency
Finally, some commenters brought up the topic of cryptocurrency and its potential role in the future of banking. While opinions on this subject vary widely, there are some interesting developments worth considering.
For example, FedNow is scheduled for release in summer 2023 and will feature instant payments/settlements. Additionally, numerous Ripple partners are working with the Fed, such as MasterCard, Temenos, and Cross River Bank. Fidelity is also now offering crypto trading.
While some see these developments as evidence that big banks are trying to control the crypto market, others believe that distributed ledger technology like Ripple/XRP could offer a more secure and efficient alternative to traditional banking systems.
Regardless of where you stand on this issue, it's clear that the world of finance is changing rapidly. As always, it's important to stay informed and make decisions based on sound research and analysis.