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Silvergate Bank Crypto News: The crypto market saw the biggest shock event of the year 2023 so far with Silvergate Capital warning about its ability to operate in the current environment. The FTX related contagion clubbed with rising interest rates in recent months took a toll on the bank’s financial health. As the largest crypto banking partner in the US attracted FUD, cryptocurrency prices tanked with an inherent fear of further dip over the weekend. If the liquidity situation in the US doesn’t improve over the next few days, there is a danger of crypto crash as it appears to be difficult for companies to find a banking partner that supports digital assets related transactions.
Also Read: Massive ETH Dump By Whales As Developers Reveal Ethereum Shanghai Upgrade Date
What Next For Crypto Firms In US?
Owing to stricter financial regulations in the country, crypto companies had in the recent past found it difficult to maintain working relationships with US based banking partners. While Silvergate’s woes from FTX contagion were already revealed, the larger picture about difficulty with crypto related banking activity in the US came out after top crypto exchange Binance spilled the beans. In first week of February 2023, it announced temporary suspension of deposits and withdrawals of US dollars using bank accounts.
Hence, experts believe crypto firms could look for banking channel options in other countries, until the situation around crypto regulation in the US improves. Therefore, US based crypto companies could in the short term face liquidity issues and even worse, if traders undergo massive selloff as was seen at least twice in 2022, around Terra network collapse and the FTX liquidity crisis.
Silvergate Alternatives
Although Silvergate was established in the 1980s, it was only in the last 10 years that the bank grew rapidly thanks to its crypto related services. As it faces potential bankruptcy concerns, many big players including Coinbase and Microstrategy cut ties with the bank. While Coinbase made the switch to Signature Bank for banking operations, not all is well with the new partner as well. Last month, a New York court filing said Signature was involved in banking operations with FTX.
Among the financial institutions that served crypto companies, apart from Silvergate and Signature are Metropolitan Commercial Bank and Evolve. While the Metropolitan Commercial Bank already announced its exit from the crypto-asset related vertical, Evolve‘s services are limited to supporting select cryptocurrency use cases.
Also Read: Citadel To Rescue Silvergate From Fund Crisis? Here’s Why!
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