Silvergate, a bank known for its cryptocurrency-friendly policies, has announced that it will cease operations due to recent legislative and business changes. The holding company for Silvergate Bank, Silvergate Capital Corporation, issued a press statement on Wednesday stating that an orderly wind-down of the Bank activities and a voluntary liquidation of the Bank is the safest course of action. The bank will completely refund all deposits as part of its wind-down and liquidation process.
As per the statement, the bank is considering the best ways to settle lawsuits and protect the remaining value of its assets, particularly its in-house technology and tax assets. Silvergate Capital has stated that it is willingly dissolving the bank in accordance with all required regulatory procedures.
In addition to the prolonged cryptocurrency bad market, Silvergate has lately come under the scrutiny of US regulators, with the White House admitting it was keeping tabs on the bank’s health. Senator Elizabeth Warren of the United States claims that “crypto-friendly” financial institutions like Silvergate have increased the likelihood of a “crypto collapse,” leaving American taxpayers to pick up the tab.
In a speech that was filmed in January, Warren stated that it is the responsibility of bank regulators to protect the financial system and taxpayers from the risk of cryptocurrency theft. The tools are at the bank’s disposal, and they must be used, he stressed.
The decision was made a few days after Silvergate’s shocking announcement that the company was experiencing financial trouble stunned the industry. The organisation, which was one of the few banks to serve as an intermediary in the institutional crypto sector, is yet another casualty of the “crypto winter” in the wake of FTX’s collapse, which employed the institution to move customer cash.
Thirty years ago, Silvergate was a modest local lender in California, but it has now expanded to become a significant player in the cryptocurrency business. Nevertheless, as markets became unstable, its fate changed.
Silvergate’s closure will have a significant impact on how money enters and leaves the cryptocurrency industry. The bank had previously operated the Silvergate Exchange Network (SEN), a cryptocurrency payments platform that allows investors and cryptocurrency exchanges to move dollars around-the-clock. Due to the volatility of cryptocurrencies, very few financial institutions are interested in working with them.
