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The collapse of the Silicon Valley bank earlier this month dealt a blow to wine and crypto companies that had entrusted their money to lenders and were waiting to stay afloat.
But it gave a big boost to the major wine and cryptocurrency industries as panicked investors exited the financial sector and turned to alternative assets.
Bitter Bank : Since 1994, SVB has provided more than $4 billion to winemakers with more than 400 wine industry clients (including wineries, vineyards and retailers) working with the wine division bank premium, according to the bank's website.
Recent SEC filings show that SVB had about $1.2 billion in loans to high-end wine customers when the bank failed. The wineries can get their money back, but aren't sure what will happen to their lines of credit now that the details of the bank sale to First Citizens Bankshares are finalized.
SVB also has deep ties to the cryptocurrency industry. Circle, the company behind the popular USDC stablecoin, says it has about $3.3 billion of its $40 billion in SVB reserves. The company's USDC price has since recovered following the bankruptcy news, but is down.
The collapse of Signature Bank, a major cryptocurrency lender, has serious implications for the industry. The FDIC recently advised crypto bank customers to close their accounts and move their funds by April 5, as deposits were not included in the bailout deal agreed with Flagstar Bank this month.
Still, Bitcoin rose more than 4% on Wednesday, its best performance in more than a week. The currency is up 23 percent this month. The price of the single currency is now above $28,000, its highest level since last spring.
That's because investors are worried about the safety of the U.S. banking system and are looking for ways to keep their money out of it, cryptocurrency advocates say.
"Bitcoin and other cryptocurrencies are being built on top of the blockchain, a decentralized structure under the control of a single entity," said Karan Malik, head of Web3 Strategy at Legacy Suite. Arguments for decentralization and adoption of cryptocurrencies have become more valid since the collapse of the banks.
Kathy Wood, founder of Arc Investment Management, said on Twitter that the rise of cryptocurrencies is not surprising. "Their blockchain is decentralized, transparent and auditable. Banks are not particularly up-to-date.
Investments in fine wines have increased as investor confidence in the banking system has faltered.
Cult Wine CEO and co-founder Tom Gearing said: “Fine Wine's performance in market environments demonstrates its ability to generate alpha and maximize risk-adjusted returns in a diversified portfolio. Investments. .
The Knight Frank Wealth Report, an annual analysis by real estate advisers, shows that 39% of ultra-high net worth individuals will invest in summer this year.
"Interest in alternatives is growing and it's where wealth will grow over the next decade," the report says.
After the collapse of SVB and Firma Bank, other safe investments such as gold rose. Spot gold is now up 7.4% for the month, despite remaining flat over the past few days. Silver rose 11% on the month.
What's next : The market recognizes that we are "heading into a cycle of credit crunch, income squeeze and recessionary default." 3iQ manager, reading notes. "What resources will you go to until that happens?" he asked. "10 years (of treasuries) are over, gold is up, yen is up and bitcoin is up."
Will the renaissance of alternative investments continue?
Goldman Sachs predicted this week that households would be sellers of $750 billion of stocks in 2023 and companies would be buyers of stocks of $350 billion in 2023, down 47 percent from 2022.
But the federal government, the FDIC and the Federal Reserve Bank are working around the clock to assure investors and customers that America's financial system is safe. Meanwhile, alternative investments in cryptocurrencies, wine and metals come with their own volatility and risks.
When SVB's business strategy slips, the federation has no regulatory leadership
The Fed will be without a chairman for nine months between the summer of 2021 and the summer of 2022, the same period when the Silicon Valley bank's business strategy has failed, U.S. Representative Frances Hill, Republican of Arkansas, said Wednesday.
Barr will be sworn in in July 2022 to replace Randall Quarles after the federation's supervisory co-chairman, Michael Barr, steps down in October 2021. He was in charge. The transition period for follow-up is nine months.
"I'm sorry, I don't know the technical answer to that question," Barr said when asked who controlled the bank at the time.
President Joe Biden could not quickly name a replacement for Quarles, and the Fed has no plans to replace him in the interim, wrote Peter Conte Brown, a professor at the Wharton School of the University of Pennsylvania and a fellow at Brookings. Quarles' year of office. Instead, County Brown said, the federation's critical oversight and regulatory priorities "are handled by the federal board of governors, in a committee structure."
Biden ultimately chose former federal governor and Treasury Department official Sarah Blue Ruskin for the role, but she withdrew her name from consideration after becoming embroiled in a dispute with a fintech company in Colorado. After all, Biden chose Barr in May 2022.
"I think the regulatory urgency has been lost here," Hill says, adding that it took a full 12 months between the trend in banks involving federal auditors and action to correct them.
Conte Brown wrote that without an Comptroller General during that period, financial oversight and regulation may not have been at the forefront of federal decision-making.
"I think you're asking a very basic question. That's one of the things we do in our review," Barr told The Hill. "Should regulators be more aggressive in how they respond to perceived risk? That's something we're looking at more closely."
The failure of the bank's management, supervision and control system led to the failure of SVB: a senior Federal Reserve official
The collapse of Silicon Valley Bank and Signature Bank caused weeks of turmoil and fear in the US financial system. On Wednesday, the House Financial Services Committee used a hearing to find out what happened.
According to Barr, there are several reasons.
"Anytime there's a bank failure like this, I think bank governance is failing, regulators are failing and our regulatory system is failing," Barr said at the hearing.
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