Crypto bank Silvergate Capital announces intent to Liquidate

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Crypto market falls on the news of Silvergate Capital announcement that it will be winding down operations to liquidate its’ bank. The company stock plunged over 36% in after hours trading.

Silvergate’s news is a matter of serious concern for crypto companies, due to the limited selection of banks available to the industry. Just last week the FDIC, Fed and OCC coordinated a joint warning to banks about the liquidity risk that comes with banking crypto companies.

Issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices.

Business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector raise significant safety and soundness concerns. 

Silvergate has been struggling for months. Laying off 40% of its workforce in January, the firm reported nearly $1 billion dollar net loss in the fourth quarter following a rush for the exits at the end of last year that saw customer deposits plummet 68% to $3.8 billion. To cover the withdrawals, Silvergate had to sell $5.2 billion dollars of debt securities.

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