Silvergate Bank, which has been a cornerstone of the cryptocurrency world, has announced its closure and return of deposits. In a press release the bank’s holding company, Silvergate Capital Corporation, said it made the decision to close “in light of recent industry and regulatory developments.”
It has long been clear that the company was struggling along with some of its most famous clients such as FTX and Genesis. In January, its earnings report showed that it lost a billion US dollars in one quarter after its customers withdrew $8.1 billion. Then, on March 1, it filed a document saying its financials were even worse than the quarterly report showed.
There are some concerns about what the crypto landscape will look like without Silvergate, especially when it comes to where companies will turn for cash.
One of major concerns is that cryptocurrency companies may turn to less regulated institutions for their banking needs, potentially making the space even riskier for all involved. In other words, if there isn’t a bank that plays by the rules and is willing to do business with them, they may have to find a bank that goes against the rules.
As for the next steps for the bank, it’s 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.”
Earlier this month, the bank closed its Silvergate Exchange Network, which allowed crypto exchanges such as Coinbase, Gemini and Kraken to transfer money between each other and other institutions.