First Republic Bank became the third regional bank in less than two months to fail 鈥� joining SVB and New York-based 鈥� as many fear the banking contagion will continue to spread.

While not having the same tight associations with the tech industry as SVB, First Republic Bank did have an expanding technology division and served as the bank of a growing number of startups.

That likely was one reason the bank moved quickly during the collapse of SVB to shore up its own house, receiving funding from the and JPMorgan Chase to bring its reserves to $70 billion.聽

In the end, that was not enough to assure clients, as the bank reported it had lost $102 billion in deposits in the first quarter 鈥� more than half of what it held at the end of last year.

Tech and banks

JPMorgan Chase will now take over First Republic鈥檚 $229.1 billion of assets and $103.9 billion in total deposits, as well as 84 offices in eight states.

The move likely will not ease concerns in the tech community, as all three banks had significant ties to the industry.聽

SVB had relationships with more than 50% of all venture-backed companies in the U.S. and countless VC firms, while Signature Bank 鈥� mainly known for its real estate division 鈥� also had significant venture lending and crypto ties.聽

Just on Friday, the a report on SVB鈥檚 collapse, concluding it was due to bank management鈥檚 inability to manage risk properly, and lax Fed supervision and regulation.

It also said SVB鈥檚 issues showed 鈥渟ystemic consequences through contagion鈥� that can occur regardless of a bank’s size and role in the financial network.

That becomes truer by the day.

Further reading:

SVB Collapse 鈥楢 Textbook Case Of Mismanagement鈥� 鈥� Fed Report

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It鈥檚 no secret that the relationship between the and the crypto industry is akin to that of a dog and a feral cat.

However, an interesting further illustrates that frayed relationship and the fact that the SEC will not make it any easier for crypto to break out of its tailspin.

According to the story, the SEC did not give approval for public listings to crypto-focused companies such as , and . The companies all were looking to go public through mergers with special-purpose acquisition companies.

While the SEC did not stop any of the firms from merging, the slow pace of the review process and extensive questioning seemed to hurt their efforts to list, per the report.

Circle鈥檚 plight

Boston-based Circle鈥檚 effort to go public certainly caught our eye before finally reaching its long, winding conclusion last month.

Circle鈥檚 proposed merger with blank-check firm Concord, which is backed by former boss , has been its own long and winding story.

The company 鈥� an issuer of USD Coin, a type of stablecoin 鈥� announced in July 2021 it would merge with Concord in a deal that would value the company at $4.5 billion. However, USD Coin鈥檚 circulation quickly doubled and, in February of last year, Circle terminated its previously announced merger agreement and agreed to new terms that doubled the crypto company鈥檚 valuation to $9 billion.聽

That deal was expected to close last month, but instead the company called off its proposed merger agreement.

According to the report, the SEC raised more than 100 questions with Circle鈥檚 disclosures about the SPAC agreement.

Again, none of this comes as a surprise, but it is significant. VCs and other institutional Investors are likely more wary than ever about backing crypto startups. If it becomes clear one of the paths to a liquidity event is blocked by an agency such as the SEC, the appetite to invest in the space becomes even less.

In a market where it likely will be hard to raise funding for crypto-focused startups, the SEC鈥檚 actions may increase that difficulty level even slightly more.

Further reading:

• Funding To Web3 Startups Plummets 74% in Q4
• FTX Collapse Will Reverberate Throughout The VC World For A Long Time
• How VCs Invest In Crypto Will Be Changed By FTX鈥檚 Spectacular Fall
• Semafor To Buy Back Bankman-Fried鈥檚 Stake 鈥� Report

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