The collapse of Silvergate, a crypto-friendly financial institution, will seemingly considerably impression the crypto ecosystem and its ties with the U.S. banking sector.
Earlier this week, the mum or dad firm of Silvergate Financial institution introduced plans to wind down operations and liquidate the financial institution. The announcement got here after the crypto-friendly financial institution suffered $1 billion price of losses within the final quarter of 2022 as a consequence of the collapse of crypto change FTX, one in all Silvergate’s main purchasers.
Silvergate was one of many few regulated monetary establishments offering banking companies to crypto firms and exchanges. Its downfall will seemingly reinforce U.S. regulators’ arguments that crypto threatens the standard monetary system.
Earlier this 12 months, U.S. banking regulators issued a press release warning banks in regards to the dangers of serving crypto-related firms.
However crypto trade leaders spoke out in opposition to this evaluation, declaring that the crash of Silvergate was extra a explanation for basic banking threat than its publicity to crypto property.
As Caitlin Lengthy, founder and CEO of Custodia Financial institution, defined, Silvergate would have survived the financial institution run with out impairing its capitalization if it had held sufficient money in its deposits to satisfy prospects’ withdrawal requests.
To study extra in regards to the causes and penalties of the Silvergate meltdown, try Cointelegraph’s latest video report on YouTube — and don’t overlook to subscribe!
