To be clear, Etsy is not my concern here. They will probably survive just fine regardless of whether we deem them to be responsible or not. That's part of the point. The sole question was the sellers, and trying to examine why they inspire more sympathy to similar-sized companies that may be directly banking with SVB. Hence my question of whether the mere existence of a legal entity is the difference, given that in fact many Etsy sellers do of course have simple LLCs set up. I would fine "Hey, Etsy sellers need to look into Etsy's bank to be responsible too" consistent with "3 person YC companies need to be responsible about the bank they choose", or acknowledging that's a tall order for both. But not one and not the other, was my only point here.

> Yes... That's what SV just did to its ecosystem due to over-reliance on one bad bank because "optimization is king" is the mantra of the whole machine.

If it puts your mind at ease, I think the result is going to be the same regardless of what happens to depositors: everyone now will try to spread out their money and sweeps will become part of startups 101, etc. In that sense, the system has worked: the irresponsible bankers are being punished, they and their investors lost their bank. I promise no one is going to wake up and say "well, glad that got magically solved" and not be super paranoid going forward. If anything, if depositors aren't made whole, this particular demographic is more likely to, to your point, over-optimize in that direction (perhaps create investment vehicles to short regional banks or something, who knows).