United Kingdom

UK forms Bitcoin Policy org to boost BTC education and adoption

A Bitcoin-only policy organization in the United Kingdom seeks to steer a course for greater levels of BTC adoption.

God save our gracious coin, and long live the coin. A team of entrepreneurs, environmentalists and Bitcoin (BTC) advocates have assembled to back Bitcoin in Britain.

Bitcoin Policy UK (BPUK) unites stakeholders, policymakers, environmentalists, tax specialists, Bitcoin experts and miners to “unlock the potential of Bitcoin” in Britain and explore how the decentralized currency’s burgeoning industry could benefit U.K. households, businesses and communities.

BPUK’s primary objectives are to drive investment, generate and prepare students for the Bitcoin jobs of the future, raise awareness and education, and explore the use of wasted and stranded energy resources for Bitcoin mining.

Freddie New, BPUK’s head of policy, told Cointelegraph that “the genesis of this project was the Bitcoin Collective Conference in Edinburgh” — the U.K.’s largest Bitcoin conference, taking place in fall 2022.

Bitcoin advocates Natalie Brunell, Lawrence Lepard, Greg Foss and Jeff Booth on stage at the Bitcoin Collective in 2022. Source: Bitcoin Collective

New told Cointelegraph that most of the team had been working on Bitcoin advocacy in one way or another before the conference, “but coming together like this will enable us to formalize these efforts and focus on three key related areas.” He continued:

“Getting clear and correct information on Bitcoin to policymakers and regulators, highlighting the environmental and sustainability benefits of the mining industry, and collating and providing educational resources for the next generation of Bitcoiners.”

Some of the advisers and board members are familiar to Cointelegraph readers. Author and journalist DecentraSuze, whose son recently introduced Bitcoin to the classroom, is a director, while Jordan Walker, co-founder of The Bitcoin Collective, and Mark Morton are advisers. Morton’s Bitcoin mining company, Scilling Digital Mining, was featured in a recent Cointelegraph mini-documentary:

Walker told Cointelegraph that the BPUK is an important piece of the collective puzzle to drive Bitcoin education in the U.K.:

“It’s time for the UK to step up when it comes to embracing new technologies such as Bitcoin, otherwise we risk getting left behind.” 

New told Cointelegraph that the BPUK is not-for-profit. To operate, it hopes to raise funds through the community, tapping into the growing trend of funding projects with satoshis, or small amounts of BTC, via the Lightning Network, a layer-2 instant payment solution built atop Bitcoin.

Part of the team’s mission is to locate and harness renewable, wasted or stranded energy across the U.K., New explained. 

“We’re working […] to identify potential sites for sustainable mining, and our aim is to develop some small mining installations to use as ‘proof-of-concept’ sites.

He continued with the plan: “We can then invite British policymakers to these sites so they can see mines in action and hopefully understand more about the industry’s potential to mitigate vented methane, provide demand response for renewable grids, or simply act as a customer for energy that is otherwise wasted.”

The bagpiper procession that brought the Bitcoin Collective conference to a close. Source: YouTube 

The U.K. has burgeoning renewable energy sources but lacks in hash rate (a measure of the Bitcoin protocol’s security). According to the Cambridge Center for Alternative Finance, the U.K. supports 0.23% of the global monthly hash rate, compared with the United States’ 37.84%.

This is partly due to electricity costs in the U.K. exceeding those of the U.S. and Asia, but also due to Bitcoin mining awareness — or a lack thereof — in the U.K. Moreover, legacy media platforms have taken aim at the Bitcoin mining industry in recent years — the Guardian critiqued Bitcoin as “digital beef” instead of “digital gold.”

A heat map of the monthly Bitcoin Mining hash rate. The U.K. is light orange, at 0.23%. Source: CCAF

BPUK highlighted that in light of the U.K.’s departure from the European Union, it could develop a Bitcoin and cryptocurrency regime separate from that of the Markets in Crypto-Assets (MiCA) regulation in Europe. The European parliamentary committee on MiCA may threaten Bitcoin mining on the continent. 

BPUK co-founder Krista Edmunds took inspiration from El Salvador’s decision to adopt Bitcoin as legal tender in 2021. Edmunds explained:

“The U.K. has an immense opportunity to become one of the first jurisdictions globally to embrace Bitcoin. We have seen what is possible in El Salvador, which is experiencing huge gains due to its forward-thinking approach to Bitcoin. The U.K. can secure a similar competitive advantage, and we hope to support the British people in making that happen.”

On the governmental side, the policy group will have an opportunity to educate and inform. Lisa Cameron, a member of Parliament and chairperson of the Crypto and Digital Assets All-Party Parliamentary Group (APPG), told Cointelegraph in an interview last year: “We are on a learning curve, and it’s just very, very important because the U.K. government has a policy vision that the U.K. will become an international hub of cryptocurrency and digital assets.” She added that there was some confusion surrounding Bitcoin, central bank digital currencies and cryptocurrency. 

Cointelegraph’s Joe Hall speaks to MP Lisa Cameron in Edinburgh.

New explained that as a Bitcoin-only organization, the BPUK ultimately seeks to “make sure that Bitcoin is included in the government’s proposals, if not at the front and center.”

Crypto Biz: Twitter’s DOGE bet, Canada’s new crypto conglomerate, UK banking news

This week’s Crypto Biz explores Canada’s new crypto conglomerate, the recent premature passing of the Cash App creator in San Francisco, as well as DOGE news, and U.K. crypto challenges.

Twitter CEO Elon Musk has made another marketing move to bridge the social media platform with the crypto community by switching its logo icon to the Shiba Inu dog — Dogecoin’s (DOGE) digital symbol. The move, however, seems to be more than just an engagement strategy. It comes just two days after Musk asked a judge to dismiss a $258 billion lawsuit alleging the operation of a pyramid scheme to promote Dogecoin. 

Whether intended or not, the new icon led to another surge in DOGE prices during the week.

A less optimistic reality faces crypto firms in the United Kingdom, where financial institutions are limiting the ability of crypto-related businesses to access banking services. The move goes in the opposite direction of Prime Minister Rishi Sunak’s plans to prioritize financial technology disruption and make the U.K. a global crypto hub.

This week’s Crypto Biz explores Canada’s new crypto conglomerate, the recent premature passing of the Cash App creator in San Francisco, as well as DOGE news, and U.K. crypto challenges.

Elon Musk changes Twitter icon to Doge after seeking lawsuit dismissal

Dogecoin fans — and investors — welcomed the new Twitter icon with the popular meme token. The social media platform updated its avatar on April 3, two days after its CEO Elon Musk asked a United States judge to dismiss a $258 billion lawsuit filed by investors alleging the operation of a pyramid scheme to promote Dogecoin. Multiple market studies in the past have suggested that Musk tweeting about DOGE tends to drive its price higher. Musk’s lawyers, however, argued that “funny pictures” and “tweeting words of support” do not amount to a fraud claim. In this week’s case, at least, the marketing move positively impacted the altcoin’s price, with the token surging by over 22% one hour after the icon change.

WonderFi merges with Coinsquare and CoinSmart to form regulated crypto asset platform

A new crypto conglomerate has emerged in Canada as WonderFi Technologies, Coinsquare, and CoinSmart Financial have announced their merger to become the country’s largest regulated crypto trading platform, with over 1.65 million registered users. The newly merged company promises to offer Canadians a wide range of diversified products and services, including retail and institutional crypto trading, staking products, business-to-business crypto payment processing, sports betting and gaming. The companies “transacted over $17 billion since 2017 and have over $600 million in assets under custody.” The new company is estimated to have approximately $50 million in cash and investments and no outstanding debt.

United Kingdom banks are turning away crypto clients

Crypto companies are facing difficulties accessing banking services in the United Kingdom. The few banks still working with crypto firms are requesting more documentation and information about how they monitor clients’ transactions. Challenges include having applications rejected, accounts frozen and overwhelming paperwork. Crypto companies are turning to payment service providers such as BCB Payments and Stripe to maintain business operations in the United Kingdom. Just a few weeks ago, HSBC Holdings and Nationwide Building Society banned cryptocurrency purchases via credit cards for retail customers in the country, joining a growing list of banks in the U.K. to tighten restrictions on digital assets. 

Cash App creator dies following stabbing in San Francisco

Tragic news came from San Francisco as Bob Lee, the former chief technology officer of Square and creator of Cash App, was found dead following a stabbing in the early hours of April 4. A notice from the San Francisco Police Department explained officers attended to a report of a stabbing at approximately 2:35 am local time, finding a “43-year-old adult male victim suffering from apparent stab wounds.” Lee was a proponent of cryptocurrencies who gained prominence in the tech industry for being the first chief technology officer of the payments platform Square — later renamed Block — and for creating the popular mobile payment service Cash App.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto, delivered directly to your inbox every Thursday.

UK banks are turning away crypto clients: Report

Challenges for crypto companies range from having applications rejected, accounts frozen, to being overwhelmed with paperwork.

Crypto companies are facing difficulties accessing banking services in the United Kingdom, according to multiple sources interviewed by Bloomberg. The few banks still working with crypto firms are requesting more documentation and information about how they monitor clients’ transactions.

Challenges include having applications rejected, accounts frozen and overwhelming paperwork. Crypto companies have even complained to the government of Prime Minister Rishi Sunak, as the situation worsened in the past weeks. The move goes in the opposite direction of Sunak’s plans to prioritize financial technology disruption and make the U.K. a global crypto hub.

“The U.K. banking reaction has been more acute than the EU one,” Tom Duff-Gordon, vice president of international policy at Coinbase, told Bloomberg. According to Duff-Gordon, the European Union’s efforts to establish a framework for digital assets are making banks more receptive to crypto firms in other countries. The European parliamentary committee passed the Markets in Crypto Assets (MiCA) legislation in October, nearly two years after it was first introduced in September 2020. Its final vote is scheduled for this month.

So far in 2023, venture capital investment in digital asset companies reportedly dropped 94% to $55 million in the U.K., according to data from PitchBook, against a 31% increase in other countries in Europe. Crypto companies are turning to payment service providers such as BCB Payments and Stripe to maintain business operations in the U.K.

Related: US crackdown will push crypto ‘center of gravity’ to Hong Kong: Kaiko CEO

Earlier in March, the HSBC Holdings and Nationwide Building Society banned cryptocurrency purchases via credit cards for retail customers, joining a growing list of banks in the country to tighten restrictions on digital assets. 

Also in March, the self-regulatory trade association CryptoUK proposed the creation of a “white list” of registered firms in the country to address banks limiting or banning transactions with crypto companies. “Many of the major U.K. banks have now put in place bans or restrictions, and we are concerned that other banks and Payment Services Providers (PSP’s) may also soon follow suit,” said CryptoUK. “We believe that government action is now warranted.”

Similar to the United States, authorities in the U.K. are tightening regulations on crypto companies. The Financial Conduct Authority proposed in February a set of rules that could subject executives of crypto firms to two years in prison if they don’t meet certain conditions related to promotion.

Hodler’s Digest: FTX EU opens withdrawal, Elon Musk calls for AI halt, and Binance news

UK government announces ‘robust’ crypto regulation as part of economic crime plan

The focus on crypto regulation was part of the U.K. government’s plan to fight economic crime, which also included addressing law enforcement’s ability to seize and store assets.

The government of the United Kingdom has laid out plans to step up regulation of crypto assets in its efforts to respond to economic crime in the country.

In a policy paper released on March 30, the U.K. Treasury and Home Office said it planned to “robustly” regulate crypto to fight illicit use of digital assets. The focus on regulation was part of the government’s economic crime plan from 2023 to 2026, which also included pooling “the knowledge and abilities of law enforcement agencies” to review and strengthen how crypto assets involved in legal proceedings may be seized and stored.

“These steps will be in keeping with our ambition to make the U.K. an attractive destination for cryptoassets and cryptoasset innovation in the world,” said the plan. “Challenging as it is, effective cryptoasset regulation benefits everyone, including consumers and firms.”

According to the policy paper, the U.K. government said it expected criminals to shift their crypto transactions to “less regulated exchanges and services” in other jurisdictions. The country’s Financial Conduct Authority, or FCA — one of the bodies behind the enforcement of crypto asset regulation — will be working with its international counterparts to exchange information related to its response on the regulation and supervision of crypto. According to the paper:

“The [National Crime Agency]’s National Assessment Centre assesses that based on estimates of UK transaction volumes, illicit cryptoasset transactions linked to the UK in 2021 likely equated to at least £1.24 billion (~1% of total transaction value) with a realistic possibility they were significantly higher.”

As part of its plan of action, the government said it planned to coordinate with various agencies to implement the Financial Action Task Force’s Travel Rule as well as pass the Economic Crime and Corporate Transparency Bill by the end of the fourth quarter of 2023. Other goals included improving communications between the FCA and crypto firms in the second quarter of 2024.

Related: UK police council reports there are officers in every unit trained for crypto enforcement

While the U.K. seems to be pursuing a response to crypto on multiple fronts — from law enforcement to regulation — taxpayers in the country face their own reporting obligations. On March 15, the U.K. Treasury released a report announcing it would amend the self-assessment forms for crypto assets starting for the 2024–25 tax year.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

G7 to collaborate on tighter crypto regulation: Report

Leaders from Japan, the United States, the United Kingdom, Canada, France, Germany and the European Union are expected to outline a global cooperative strategy for digital assets in May.

The next G7 meeting might bring a push from the seven biggest democracies for tougher regulations on cryptocurrencies around the world, Kyoto news agency reported on March 25.

Together, leaders from Japan, the United States, the United Kingdom, Canada, France, Germany, and the European Union will outline a cooperative strategy to increase crypto transparency and enhance consumer protections, as well as address potential risks to the global financial system, officials told Kyoto. This year’s summit is set to happen in Hiroshima in May.

Among G7 members, Japan already regulates cryptocurrencies, while the European Union’s Markets in Crypto-Assets (MiCA) regulation is set to go into effect in 2024. The United Kingdom is gradually developing its crypto framework, with a special category for crypto assets on tax forms recently introduced and plans for a digital pound in the works.

Related: The limitations of the EU’s new cryptocurrency regulations

Canada treats digital assets as securities and the United States currently applies existing financial regulations to crypto, with some anticipating a crypto regulatory framework from lawmakers in the coming months.

Parallel efforts toward standards for digital assets are being made by the Financial Stability Board (FSB), the International Monetary Fund (IMF), and the Bank for International Settlements (BIS), the group of the 20 biggest economies of the world — collectively known as G20 — announced in February during a meeting in Bengaluru, India.

India’s finance minister, Nirmala Sitharaman, during FMCBG meeting in Bengaluru. Source: Ministry of Finance

Recommendations on the regulation, supervision and oversight of global stablecoins, crypto assets activities and markets are scheduled to be delivered by July and September. It is unclear, however, what the overall tone of the recommendations will be.

For instance, in February the IMF released an action plan on crypto assets, urging countries to abolish legal tender status for cryptocurrencies. The IMF opposition to crypto as legal tender is well known, especially since El Salvador adopted Bitcoin as its official currency in September 2021. The fund, however, has been advocating for countries to adopt greater crypto regulation, while it’s working on an interoperable central bank digital currency platform to connect multiple global CBDCs and enable cross-border transactions.

Magazine: Best and worst countries for crypto taxes — plus crypto tax tips

CryptoUK calls on regulators to address de-banking of digital asset firms

The trade association said many banks in the U.K. had begun imposing blanket bans on dealing with crypto firms “instead of taking a risk-based and case-by-case approach.”

The self-regulatory trade association CryptoUK has proposed providing a “white list” of registered firms in the United Kingdom to address banks limiting or banning transactions to crypto companies.

In separate letters to U.K. Economic Secretary Andrew Griffith and members of the Financial Conduct Authority and Payment Systems Regulator dated March 21, CryptoUK said many banks had begun imposing blanket bans on dealing with crypto firms “instead of taking a risk-based and case-by-case approach.” The proposed white list would allow registered crypto companies to conduct transactions with banks freely without limitations or the threat of bans.

“Many of the major UK banks have now put in place bans or restrictions, and we are concerned that other banks and Payment Services Providers (PSP’s) may also soon follow suit,” said CryptoUK. “We believe that government action is now warranted.”

Under the U.K.’s Financial Conduct Authority, crypto services providers in the country must be registered and comply with Anti-Money Laundering regulations. Some U.K. banks, including HSBC Holdings and Nationwide Building Society, have reportedly banned crypto purchases for retail customers using credit cards.

Related: Congress announces March 29 hearing into failures of SVB and Signature Bank

The CryptoUK proposal echoes concerns among digital asset advocacy groups and lawmakers in the United States following the failures of the crypto-friendly Silvergate Bank, Silicon Valley Bank and Signature Bank. The U.S.-based Blockchain Association submitted requests for information from the Federal Deposit Insurance Corporation, the board of governors of the Federal Reserve System and the Office of the Comptroller of the Currency related to the potential “de-banking of crypto firms.”

Crypto assets to become a separate category in UK tax forms

The recent national budget, published by His Majesty’s Treasury, announces the amendment of the self-assessment forms for crypto assets.

As the United Kingdom gradually develops its own comprehensive crypto framework, His Majesty’s Treasury is introducing a separate category for crypto assets in tax return forms. The particular line should appear in tax forms in 2024–25.

On March 15, the U.K. Treasury published a report paper on the national budget for Spring 2023. The document announces the amendment of the self-assessment forms for crypto assets.

In the table of anticipated expenses and revenues of the national budget, the crypto assets line appears only from 2025–26. That means British citizens would have to declare them for the first time in the previous tax year — 2024–25. Currently, the Treasury doesn’t provide any specific numbers of anticipated budget revenues from this tax category — the numbers in the table stand at the nominal mark of 10 million British pounds ($12 million).

Related: UK banks HSBC, Nationwide to ban crypto purchases with credit cards

The changes were welcomed by the Chartered Institute of Taxation (CIOT), the leading professional body that analyzes national tax policies. Gary Ashford, the deputy president of the CIOT, stated:

“Highlighting the need to declare crypto asset transactions in the tax return will help raise awareness of people’s obligations in this area.”

However, Ashford highlighted the need for additional measures to counter “widespread ignorance of tax payment and reporting requirements for crypto.” According to Ashford, it is law-income crypto investors who don’t possess sufficient understanding of tax reporting.

Earlier in March, the Financial Conduct Authority (FCA) reported to the Treasury that it is “midway through a quite ambitious reset” as the Financial Services and Markets bill passes through the Parliament. When passed, the bill would give the FCA new regulatory powers over the cryptocurrency industry.

NatWest bank puts $6K monthly limit on crypto exchange payments

NatWest’s head of fraud protection emphasized the importance of self-custody in crypto amid the bank imposing new crypto restrictions.

NatWest, a retail and commercial bank in the United Kingdom, is taking measures to protect customers from potential crypto losses amid Bitcoin (BTC) hitting multi-month highs.

On March 14, NatWest introduced major restrictions on payments to cryptocurrency exchanges, imposing daily and monthly caps for such transactions.

According to an announcement shared with Cointelegraph, NatWest has set a 1,000 British pound ($1,216) limit for daily transactions involving crypto exchanges. The bank has also imposed a 30-day payment limit of 5,000 GBP ($6,080).

The latest restrictions by NatWest aim to help protect customers from losing “life changing sums of money,” the bank said, adding that crypto investments are risky due to a significant amount of scams in the industry.

“We have seen an increase in the number of scams using cryptocurrency exchanges and we are acting to protect our customers,” NatWest’s head of fraud protection, Stuart Skinner, said. The executive emphasized the importance of self-custody in crypto and cautioned crypto investors against delegating storage of their assets to a third party, stating:

“You should always have sole control of your cryptocurrency wallet and nobody else should have access. If you didn’t set the wallet up yourself or can’t access the money then this is likely to be a scam.”

According to NatWest, crypto scammers have been increasingly capitalizing on the ongoing cost-of-living crisis due to promises of high returns.

“Criminals play on a lack of understanding of how cryptocurrency markets work and their unpredictability to encourage investors to transfer money to exchanges, which are often set up in the customer’s own name by the criminal or by the victim, under duress from the criminal,” the bank said. Men over 35 are most at risk due to them being more willing to take the risk on their investments, the announcement noted.

In the statement, NatWest also shared a few steps to help avoid falling victim to cryptocurrency scams, including the recommendation to never share one’s private keys with others. The bank also advised crypto investors to read all information at a slow pace to avoid rushed investments and fake websites. NatWest also recommended that investors beware of giveaways, as they are one of the most widespread scams in crypto.

Related: Binance to lose its British pound on- and off-ramp provider in 9 weeks

NatWest is known for cutting all credit and debit card payments to the Binance crypto exchange in 2021. At the time, the company referred to a high level of crypto investment scams as well.

The news comes amid Bitcoin surging above $26,000 as the United States Consumer Price Index data indicated that inflation climbed 6% year-on-year and 0.4% month-on-month. BTC price growth is also likely to be attributed to the ongoing uncertainty around the failures of major banks in the United States, including Silicon Valley Bank, Silvergate and Signature Bank.

Silicon Valley Bank collapse: Everything that’s happened until now

Events surrounding Silicon Valley Bank are moving fast. Here is a breakdown of the major developments over the last week.

The sudden collapse of Silicon Valley Bank (SVB) has quickly unfolded over the last week, depegging stablecoins, leading regulators in the United States and the United Kingdom to prepare emergency plans and raising fears among small businesses, venture capitalists and other depositors with funds stuck at the California tech bank.

Cointelegraph’s team compiled a roundup of the latest and major developments surrounding the troubled bank, starting with the most recent developments:

Mar. 13: Biden to hold those responsible “fully accountable”

U.S. President Joe Biden tweeted on Mar. 13 that he is “firmly committed” to holding those responsible for the collapse of SVB “fully accountable” adding he will “have more to say” in an address later on Mar. 13.

Mar. 12: SVB depositors to be protected, says Fed

United States federal regulators, including U.S. Treasury Secretary Janet Yellen, Federal Reserve Board Chair Jerome Powell, and FDIC Chairman Martin Gruenberg on Mar. 12 announced “decisive actions” that would “fully protect depositors” at both Silicon Valley Bank and the now-shuttered Signature Bank. 

“Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” according to a joint statement from the regulators.

Mar. 12: Fed creates $25B program to backstop banks

The Federal Reserve Board announced on Mar. 12 a $25 billion Bank Term Funding Program (BTFP) that offers loans of up to one year to banks and “other eligible depository institutions aimed at backstopping any liquidity issues they may face.

Mar. 12: Regulators spring into action

Regulators in the U.S. and the U.K. began to take action to deal with the SVB collapse. U.S. Treasury Secretary Janet Yellen said in an interview that the Treasury was focused on depositors’ needs and would not bail out the bank. U.K Prime Minister Rishi Sunak stated that there were “immediate plans to ensure the short-term operational and cash flow needs of Silicon Valley Bank UK customers.”

The Bank of London has made a formal bid for the U.K. branch of SVB.

Bloomberg reported that the FDIC had been conducting an auction process for SVB on the night of March 11. The Wall Street Journal reported that bidding closed at 2 pm  Eastern Time on March 12. Elon Musk said in a tweet that he was “open to the idea” of buying the bank. The administration of U.S. President Joe Biden is also reported to be preparing “material action.”

Mar. 11: Contagion fears spread

Reverberations were felt throughout the DeFi community as whales sought to transfer funds away from USDC. DAI issuer MakerDAO issued an emergency proposal to mitigate its $3.1 billion exposure to USDC. Swapping pool Curve Finance saw record-breaking trading of $7 billion on March 11. Fear of contagion mounted rapidly, with regional banks seen as particularly at risk, and dire warnings were sounded. At the same time, venture capitalists and others rallied around SVB to express their willingness to continue to work with the bank should it be purchased and recapitalized.

Mar. 11: The crypto industry begins to feel the pain

Reports emerge of crypto industry exposure to the failed bank. Circle had $3.3 billion in SVB. A spokesperson for Circle told Cointelegraph that “While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle and USDC continue to operate normally.“

Circle’s Reserves Composition as of March 9, 2023. Source: Circle

Circle’s USDC stablecoin depegged and lost over 10% of its value. The USDC (USDC) depeg led to a domino effect that knocked several stablecoins from their pegs as well. DAI (DAI), USDD and FRAX were affected. Circle announced that it would use corporate “resources” to cover the shortfall caused by the SVB collapse.

USDC slowly recovers after losing its $1 peg on March 11. Source: CoinMarketCap

Mar. 10: The world responds to the bank’s crisis

The Bank of England stated on March 10 that SVB UK will “stop making payments or accepting deposits,” as the central bank intends to apply to the court to place SVB UK into a “Bank Insolvency Procedure.”

U.S. depositors lined up to withdraw funds. According to an unconfirmed report, the FDIC was planning to cover 95% of uninsured SVB deposits, with 50% of them to be paid out in the coming week.

The bank’s downfall was swift, coming less than 48 hours after management disclosed that it needed to raise $2.25 billion in stock to shore up operations. Its stock price subsequently plunged, falling over 60% on March 9.

Mar. 10: Silicon Valley Bank shut down by California regulator

Silicon Valley Bank (SVB) was shut down by California’s financial watchdog on March 10 after announcing a significant sale of assets and stocks aimed at raising additional capital.

The California Department of Financial Protection and Innovation confirmed that Silicon Valley Bank was ordered to close but did not specify the reason for the shutdown. 

The California watchdog appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver to protect insured deposits. However, the FDIC only insures up to $250,000 per depositor, per institution and per ownership category. The bank held over $5 billion in funds from major venture capital firms. Silicon Valley Bank is one of the top 20 largest banks in the United States, providing banking services to crypto-friendly venture companies such as Sequoia Capital and Andreessen Horowitz.


Bank of London bids to acquire Silicon Valley Bank’s UK arm

The global clearing bank is leading a consortium of private equity firms seeking to purchase SVB’s British arm.

Global clearing institution Bank of London has submitted a formal proposal to acquire the Silicon Valley Bank’s subsidiary in the United Kingdom, according to a statement disclosed by Reuters on March 12. 

According to the statement, the purchase is an effort from a consortium of private equity firms:

“A consortium of leading private equity firms, led by The Bank of London, confirms it has submitted formal proposals to His Majesty’s Treasury, The Prudential Regulation Authority at The Bank of England and the Board of Silicon Valley Bank UK.”

Reuters earlier reported that other U.K. financial institutions were reviewing similar moves, including the SoftBank-owned lender OakNorth Bank. Abu Dhabi Investment vehicle ADQ was also interested in the SVB’s arm.

A plan to rescue startups and tech companies affected by SVB’s collapse has been drafted by British authorities. The emergency plan will include a cash lifeline for a number of businesses. 

Prime Minister Rishi Sunak said the government is working “at pace” to deliver a plan in the coming hours that would secure “operational liquidity and cash-flow needs” for Silicon Valley Bank’s UK clients. The U.K. Treasury said in a statement that it “will bring forward immediate plans to ensure the short-term operational and cash flow needs of Silicon Valley Bank UK customers are able to be met.”

On March 10, the Bank of England (BoE) halted operations of SVB branches stating that the bank has a “limited presence” in the U.K. and no “critical functions” supporting the financial system. A letter signed by over 200 founders and CEOs of UK tech companies, however, claimed that many fintech firms managed banking operations through SVB and will “therefore go into receivership imminently unless preventative action is taken.”

U.S. regulators and White House officials are reportedly working over the weekend to address the SVB collapse. Treasury Secretary Janet Yellen noted during an interview that a major bailout isn’t being considered, but investor protection efforts were underway. 

The U.S. Federal Deposit Insurance Corporation reportedly started an auction process the night of March 11 for Silicon Valley Bank. Bids were to be open for just a few hours before the process closes on March 12.