• Silvergate bank announced that it would begin winding down its operations and undergo voluntary liquidation on March 8.
• The announcement came days after the bank halted its real-time settlement service, Silvergate Exchange Network (SEN).
• The news sent shockwaves through the crypto market as the US bank served as a backbone for most large crypto companies and exchanges in the country.
Silvergate bank announced it would begin winding down operations and undergo voluntary liquidation on March 8, 2023 in light of „recent industry and regulatory developments“. This announcement followed days after the halt of its real-time settlement service, Silvergate Exchange Network (SEN) due to inquiries from the U.S Department of Justice (DOJ). The news sent shockwaves through the crypto market, resulting in a drop in Bitcoin prices and total crypto market cap below $1 trillion.
How Silvergate Got Big
Silvergate had been steadily gaining traction since November 2022 when FTX collapsed. Its stock price was depreciating by over 94%. A 24-hour loss was recorded between March 1 and 2 when it dropped 57%. It then served as a backbone for most large crypto companies in the US.
Silvergate’s Quick And Painful Death
The news of Silvergate’s liquidation sent shockwaves through the crypto market, resulting in a drop in Bitcoin prices to January lows at $19,680 after trading flat at around $21,000 for over a month. The total crypto market cap dipped below $1 trillion to struggle at around $880 billion at press time. Investor sentiment worsened with declining trading volumes and growing exchange withdrawals which were reflected by Crypto Fear & Greed Index gradually decreasing to show fear.
The Domino Effect
Silvergate’s troubles have triggered a domino effect that will not only affect cryptocurrency companies within US but also entire banking sector within country. It is likely other banking giants could share Silvergates destiny if similar circumstances arise again.
The sudden collapse of Silvergate Bank highlights how quickly regulations can reverse fortunes of even well established banks like this one which had become an integral part of US financial infrastructure by providing services to most large crypto companies and exchanges within country. Regulatory clampdowns could lead to similar outcomes for other banks too if they don’t comply with regulations properly or are unable to adjust their business practices fast enough according to changing environment .
< h2 >Conclusion h2 > Despite still being operational, Silvergate has had a profound effect on both cryptocurrency companies within United States as well as entire banking sector due to unexpected liquidation decision taken recently . As such , it serves as reminder for other banks about importance of adjusting their business practices accordingly according changes happening environment .