The voluntary liquidation of Silvergate Bank has prompted many to share their thoughts on the source of its problems and the broader impact of the collapse of the crypto-friendly bank.
From legislators to crypto analysts, crypto company executives and commentators, almost everyone has had a say. about the recent announcement of Silvergate.
Some US lawmakers have seized the moment to make a comment about the state of the crypto industry, labeling it a โrisky and volatile sector,โ which โspreads risk throughout the financial system.โ
Senator Elizabeth Warren called Silvergate's failure "disappointing, but predictable," calling on regulators to "step up the risk of crypto."
As the bank of choice for cryptocurrencies, the failure of Silvergate Bank is disappointing, but predictable. I warned about risky, if not illegal, activity by Silvergate and identified serious lapses in due diligence. Now, customers need to be whole and regulators need to step up crypto risk.
โElizabeth Warren (@SenWarren) March 8, 2023
Senator Sherrod Brown also rattle in, sharing his concern that banks engaging with crypto are putting the financial system at risk and reaffirming his desire to โestablish robust safeguards for our financial system against crypto risks.โ
The senators' comments have sparked criticism from the community, some arguing that this is not a crypto problem and that fractional reserve banking is to blame, as Silvergate had far more demand deposits compared to the cash available.
.@SenSherrodBrownyou're wrong about that #crypto triggered the Silvergate problem. What he did was $13.3 billion in demand deposits that depositors could withdraw in minutes, but only $1.4 billion in cash. Had $YES had $13.3 billion in cash, the bank run would not have affected his capital. She is not a crypto... https://t.co/nGlfHwUcBN
โ Caitlin Long โก๏ธ (@CaitlinLong_) March 8, 2023
Instead, several companies have used Silvergate's recent announcement to reiterate their lack of ties to the company or those that are now severed.
Changpeng Zhao, CEO of cryptocurrency exchange Binance sure customers on Twitter that they have no assets stored with Silvergate, while peer exchange Coinbase has also assured supporters that the bank did not hold customer funds.
Update: We are sorry that Silvergate made the difficult decision to close its operations. They were partners and contributors to the growth of the crypto economy. Coinbase has no customers or corporate cash at Silvergate. Client funds continue to be secure, accessible and available. https://t.co/78oMrLQ6VH
โCoinbase (@coinbase) March 9, 2023
Meanwhile, Nic Carter, co-founder of venture firm Castle Island and crypto-intelligence firm Coin Metrics, suggested that it was the government that "hastened the collapse" of Silvergate by launching investigations and legal attacks against it.
โThey are the arsonist and the firefighter rolled into one,โ he said. wrote.
Chief executive of financial services firm Lumida, Ram Ahluwalia, took a similar view, arguing in a tweet that Silvergate faced a run on the bank after a senator's letter undermined public confidence in the company. He said that "Silvergate was denied due process."
Related: Marathon Digital cancels credit lines with Silvergate Bank
in a previous blog postCarter referred to โOperation Choke Point 2.0โ as underway, alleging that the US government is using the banking sector to mount โa sophisticated and widespread crackdown on the crypto industry.โ
Others believe that the collapse of Silvergate will not necessarily harm the cryptocurrency industry, but along with proposed changes to tax lawswould exacerbate the exodus of crypto companies From United States
- Silvergate liquidation operations in light of "regulatory developments"
- Proposed changes to capital gains
- Proposal to eliminate the collection of tax lossesnone of these are bad for cryptocurrencies...
they are just reasons for passionate builders to operate outside of the US.
โ Tom๏ธ (@thomasjeans) March 9, 2023
With the closure of Silvergate, some have also asked where crypto companies will turn next.
Coinbase, which previously accepted payments through Silvergate, announced on March 3 that it would facilitate institutional client cash transactions for its major clients with its another banking partner, Signature Bank.
Signature Bank, however, announced in December that it intended to reduce your exposure to crypto sector by reducing deposits from customers who own digital assets.
To further reduce its crypto exposure, on Jan. 21, Signature imposed a minimum transaction limit of $100,000 in transactions that it would process through the SWIFT payment system on behalf of the Binance cryptocurrency exchange.
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