There is nothing illegal about using an e-money service for a few small transactions. When you eventually reach the cumulative amount that triggers the KYC process, you are under no obligation to complete it and refusing to do so is not "structuring".
Of course, they will suspend your account until you're in compliance with their KYC process.
I use wise ~1 time / yr. Last time I started a transfer they required ID first. I uploaded two photos and my account was immediately locked since my bday on ID did not match my wise acct (typo). Quick email to support and it was unlocked 2 hrs later. Was able to complete my transaction after that without issue. Fine experience overall if inconvenient.
To try to answer the first question: It's about who your customers are.
If you're a business with 30 employees all making 150k/yr you have 375k in payroll costs every month. Holding even 1 months payroll in cash puts you above the FDIC limit of 250k. Normal people rarely need more than 250k in cash so the ratio of business to normal people in customer base matters.
To make things worse let's say you're VC funded and you don't have monthly revenue to put towards your payroll. Instead you have X months of payroll/runway in cash in an account being slowly drawn down. Now you might have 1 year of payroll in cash. Nearly all of that is uninsured.
Quick googling shows me that SVB was only 15% insured. Likely because of their focus in startups with large balances vs regular ppl with low balances. For context BOFA is 40% insured and JP morgan is 35%.
But I do see your point, short term treasuries probably would make sense for startups right now. With a 4.2% rate on the 1 month treasuries it would make sense to setup a ladder with bonds coming due as you needed them. But in the very recent low interest rate past this probably wasn't worth the hassle for many startups.
Thanks! They wouldn't even need to keep them in 1m treasuries as overnight rate has been above 2% since last summer and is now above 4%. Also they could just have opened accounts in more banks and have their deposits secured. SVB was in all practice insolvent already last summer. I don't think all these customers could be idiots so there must have been some incentive which rewarded them for keeping the money unsucred I think.
