The news: Silicon Valley Bank’s (SVB’s) collapse last week unleashed a torrent of payment challenges for startups.
Quick recap: SVB—a mainstay for Silicon Valley’s startup and venture capital (VC) environment for the last 40 years—failed after financial disclosures led to a run on the bank.
After an auction of SVB failed on Sunday, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and the Treasury Department rolled out an expansive emergency program that included fully covering deposits at SVB and Signature Bank, which regulators closed over the weekend.
Check out this Banking Innovation article for a full breakdown of SVB’s collapse.
Why it matters: Three main payment challenges emerged in the wake of SVB’s downfall.
The bottom line: Despite regulators’ quick response, SVB’s downfall could have long-lasting effects on the tech space.
Y Combinator CEO Garry Tan called SVB’s collapse “an extinction level event for startups [that] will set startups and innovation back by 10 years or more.” He called on Congress to bring about stronger regulatory oversight and requirements for regional banks and look into potential missteps taken by SVB executives.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.