The run on Silicon Valley Bank (SVB) has ended almost as quickly as it started, with news breaking Friday that the bank has been closed by regulators, which have taken control of its deposits.

This dramatic and quick downfall for one of tech’s most prominent financial institutions is likely to have cascading effects across not only Silicon Valley but Canadian tech.

The extent of those effects is not yet clear.

With FDIC taking over control, the regulator now holds the insured deposits from SVB. The FDIC’s standard insurance to protect bank customers’ deposits covers up to $250,000 per depositor, per bank. As reported by CNBC, it is unclear at this time how larger accounts or credit lines for companies will be impacted by SVB’s closure.

The FDIC said insured depositors will have access to their deposits no later than Monday morning, and that it will pay uninsured depositors an advanced dividend within the next week.

With SVB the main bank for startups in the United States (US), and its 18th-largest bank, the impacts on the country’s tech ecosystem may be sizeable.

In Canada, SVB plays a different role, as it does not have a banking license and only provides venture debt locally. As such, unlike their American counterparts, Canadian-domiciled companies likely won’t have their funds with the bank.

Every group chat, Slack, and email chain I’m in is going crazy.

Founders have no idea if they’ll make payroll. Investors have no idea which companies are impacted or if LP funds are safe. Employees don’t have the slightest clue what’s going on.

— Alex Cohen (@anothercohen) March 10, 2023

However, Canadian startups that have their US banking with SVB, or ostensibly Canadian companies that are legally domiciled in the US for tax purposes and use SVB, will be impacted by the bank closure.

One innovation bank leader BetaKit spoke with on background noted that SVB’s downfall could also create a “credit crunch” here. Since SVB Canada does not have a national banking license it pulls its venture debt lending capital from deposits made outside of the country. The shutdown potential eliminates one pool of capital Canadian startups have relied on during the downturn.

How the shutdown of SVB will impact SVB Canada’s overall operations is also unclear at this time. BetaKit has reached out to SVB Canada for comment.

The post How Silicon Valley Bank shutdown might impact Canadian tech first appeared on BetaKit.

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