Bitcoin rises as Biden calls for tighter banking regulations after SVB

President Joe Biden said everyone with deposits at Silicon Valley Bank and Signature Bank will have access to their money today.

He stressed that taxpayers will not pay for the funds regulators will make available to depositors in Silicon Valley Bank (SVB) and Signature Bank, which include small businesses that need to run payroll.

Joe Biden calls for stronger banking rules relaxed during the Trump era

Instead, the funds will come from bank contributions to the Federal Deposit Insurance Corporation under the US Banking Act. The government will not protect investors and banks with SVB and Signature relationships.

The FDIC has transferred Signature’s funds to a subsidiary, Signature Bridge Bank NA, and will pay insured and uninsured customers under the “systemic risk exemption” rule. According to Bloomberg, approximately 90% of both banks’ deposits were uninsured.

The FDIC will also fire executives at the two institutions and investigate the events that led to their closure.

To reduce the risk of a repeat, Biden said he would ask the government to strengthen banking rules in line with the Dodd-Frank law introduced by the Obama administration, which the Trump administration partially relaxed in 2018.

“I’m going to ask Congress and banking regulators to strengthen the rules for banks to make it less likely that these types of bank failures will happen again and to protect American jobs and small businesses,” Biden said.

When pressed about whether the failure of Silicon Valley Bank and Signature could have ripple effects on the US economy, the president was unwilling to comment.

After the speech, the S&P 500 fell 1.1%, while shares of Western Alliance Bancorp fell 75% in premarket trading. TV host Jim Cramer touted the stock during his Mad Money show on MSNBC last Friday. Other stocks such as JPMorgan and First Republic have also suffered share price falls, with the latter halting trading.

The FDIC placed Silicon Valley Bank and Signature Bank into receivership on March 10, 2023 and March 12, 2023. The Federal Reserve has created a new $25 billion “Bank Term Funding Program” to provide one-year loans to banks and eased conditions for banks to use the discount window.

SVB Collapse Is Bullish For Bitcoin, Coinroutes CEO Says

Dave Weisberger of Coinroutes told Bloomberg Technology last Friday that the long-term impact of SVB and Signature will be bullish for Bitcoin. He points out that Bitcoin was designed to completely bypass the counterparty risk involved in the fractional reserve banking system under which US banks operate.

However, short-term gains over the past 24 hours may indicate that traders feel the Federal Reserve will return to a 25 basis point hike at its next meeting.

At press time, Bitcoin had risen about 16.7% from $20,585 to $24,334 on the day. ETH is up over 14% from $1,473 to around $1,650, while Cardano is up 15% to $0.349049.

Last week, CME’s Fedwatch tool raised the likelihood of a 50-basis-point hike after strong U.S. jobs numbers revealed higher wage growth and more people in work in February 2023. The Fed will use upcoming economic data for the consumer price index and personal consumption expenditures to further inform its rate hike on will choose at the meeting 21–22 March 2023, Open Markets Committee.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

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