Silicon Valley Bank’s collapse is already causing collateral damage that’s sinking stablecoin values and delaying paychecks

Customers will have access to their “insured” deposits by Monday, according to the FDIC. But FDIC insurance tops out at $250,000, and given that many startups kept a lot more than that with SVB, many businesses are likely to have difficulties accessing their capital in the coming days and weeks.

The repercussions could be widespread, affecting even people and businesses that aren’t directly connected to Silicon Valley Bank. Here’s a look at some of the key problems and ripple effects that are already playing out because of SVB’s collapse:

Payroll problems 

Because startups that banked with SVB don’t have access to their funds, those startups will have trouble taking care of everyday business expenses—including payroll. It’s unclear how many startups will be in this position, though Y Combinator CEO Gary Tan said that “30% of YC companies exposed through SVB can’t make payroll in the next 30 days.”

Even startups that aren’t clients of Silicon Valley Bank could have payroll problems. That’s because many startups use a company called Rippling to handle their payroll operations. And guess who Rippling’s bank was? Rippling CEO Parker Conrad said that Friday’s paychecks for employees of its customers were “stuck” at SVB. Conrad said his company had tapped other channels, including JPMorgan Chase, to fund those paychecks, and that affected employees would get paid by Monday at the latest.

“I want to extend a heartfelt apology to our clients and their employees who did not get paid today. You rely on us, and we didn’t deliver,” Conrad tweeted.

Public company cash coffers

Streaming video service Roku made an unsettling announcement on Friday: 26% of its $1.9 billion in cash and cash equivalents were held at Silicon Valley Bank. “At this time, the Company does not know to what extent the Company will be able to recover its cash on deposit at SVB,” Roku warned investors. 

Roku noted that it believed its remaining cash and its cash flow from operations would be enough to fund its capital expenditures and working capital needs for the next 12 months and beyond. But the opportunity cost of its diminished war chest—whether that be for M&A or some other venture—is tough to calculate. 

Video game company Roblox also announced that some of its cash was at SVB, though with only 5% of its $3 billion in cash held at the bank, its exposure is significantly less than Roku’s.

Crypto crunch

Another business that has a lot of its cash parked at SVB is cryptocurrency firm Circle, which revealed late on Friday that $3.3 billion of the $40 billion backing its USDC token is at the shuttered bank. The USDC stablecoin is one of the two most primary stablecoins in the crypto market, along with Tether, and is supposed to hold a constant 1-to-1 peg to the U.S. dollar. On Saturday morning USDC’s value had dipped to 92 cents, and smaller stablecoins such as Pax Dollar and DAI also fell from their pegs, according to Bloomberg.

Coinbase Global, one of the largest cryptocurrency exchanges, said on Friday that it would temporarily stop conversions of USDCs into U.S. dollars, with plans to resume on Monday.

Chilling effect on startups

The disappearance of SVB means one less (major) source of capital for entrepreneurs. Silicon Valley Bank was an important lender for many individuals and businesses in the startup economy, and it also had its own venture arm that funded some startups directly.

“For small startups, borrowing from banks is extremely important. And, at least in the short term, they’ve lost a source of capital,” says Reena Aggarwal, the director of Georgetown University’s Psaros Center for Financial Markets and Policy.

How badly aspiring startups feel the pinch remains to be seen. For years, Silicon Valley was awash in capital looking to be put to use, but the business climate has changed over the past year. Some tech founders have called for their peers to step into the breach. OpenAI cofounder Sam Altman, for example, urged other tech founders on Friday to bankroll startups with “no docs, no terms, just send money.” 
SVB, which had a market cap of $6.3 billion at the last market close, was also known for sponsoring conferences, dinners, podcasts, and other aspects of daily life that promoted entrepreneurship. With its collapse, the startup ecosystem loses both its financier and champion.