Nuked Hello everyone! It’s Nuked here, and I’m here to talk about the recent news that Silvergate Bank has announced it’s closing and returning deposits.
Silvergate had been a cornerstone in the crypto world, but it’s been clear for a while that the company was struggling. In January, its earnings report revealed that it lost a billion dollars in one quarter after its customers withdrew $8.1 billion. Then, on March 1st, it filed a document saying its financials were even worse than the quarterly report had shown.
So what does this mean for the crypto world? There are several concerns about what the landscape will look like without Silvergate, especially when it comes to where companies will turn to get cash. Without a bank playing by the rules willing to do business with them, crypto companies may have to turn to less regulated institutions, potentially making the space even riskier for everyone involved.
Silvergate is now liquidating “in an orderly manner and in accordance with applicable regulatory processes” and is “considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.” It has also shut down its Silvergate Exchange Network, which let crypto exchanges move money between themselves and other institutions earlier this month.
The collapse of Silvergate is sure to draw scrutiny from lawmakers, especially those who are concerned about the crypto contagion reaching the traditional financial sector. “Today we are seeing what can happen when a bank is overreliant on a risky, volatile sector like cryptocurrencies,” said Senator Sherrod Brown (D-OH).
It’s very important to keep an eye on how this situation evolves and be aware of the risks associated with banking in the crypto world. That said, I’m confident that the industry will continue to grow and innovate regardless of what happens with Silvergate.
