Silvergate downfall sparks debate over whose fault it actually was

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The voluntary liquidation of Silvergate Bank has prompted many to share their thoughts on the cause of the problem and the broader implications for cryptocurrencies of the collapse of crypto-friendly banks.

From lawmakers to crypto analysts, crypto company executives to commentators, almost everyone has something to say about the recent announcement from Silvergate.

Some U.S. lawmakers have used the moment to comment on the current state of the cryptocurrency industry, calling it a “risky and volatile sector” with “risk spread throughout the financial system.” increase.

Senator Elizabeth Warren called Silvergate’s failure “disappointing but predictable” and called on regulators to “keep up with cryptocurrency risk.”

Senator Sherrod Brown rang the chime shared his concern that banks involved in crypto are putting the financial system at risk, and reaffirmed his desire to “strongly protect the financial system from crypto risks.”

The senator’s remarks have sparked criticism from the community, with some arguing that it’s not a cryptocurrency issue and that fractional reserve banks are to blame.

Instead, several companies have taken advantage of recent announcements from Silvergate to repeatedly state that they no longer have, or have now severed, ties with the company.

Binance CEO Changpeng Zhao feel safe Customers took to Twitter to point out that cryptocurrency exchanges do not have assets stored in Silvergate, and peer exchange Coinbase assured followers that customer funds were not held by banks.

Meanwhile, Nick Carter, co-founder of venture firm Castle Island and cryptocurrency information firm Coin Metrics, has said that by launching an investigation and legal attack on Silvergate, he hopes to hasten the collapse of Silvergate. It suggested that it was the government that

“They double as arsonists and firefighters,” he said. I have written.

Ram Ahluwalia, CEO of financial services firm Lumida, had a similar view. claiming In a tweet, Silvergate faced a crackdown by the bank after a senator’s letter undermined public confidence in the company.

Related: Marathon Digital terminates credit facility with Silvergate Bank

In a previous blog post, Carter noted that “Operation Chokepoint 2.0” was underway and that the US government was using the banking sector to organize a “sophisticated and widespread crackdown on the crypto industry.” claimed.

Others believe that the collapse of Silvergate will not necessarily hurt the crypto industry, but that it will exacerbate the exodus of crypto companies from the United States with the proposed tax law changes.

With Silvergate now dead, some are asking where crypto companies are looking now.

Coinbase, which previously accepted payments via Silvergate, announced on March 3 that it will facilitate cash transactions for its institutional customers for its major customers with another banking partner, Signature Bank. Announced.

However, Signature Bank announced in December that it intended to reduce its exposure to the cryptocurrency sector by reducing deposits from customers holding digital assets.

To further reduce exposure to crypto assets, on January 21st, Signature imposed a minimum transaction limit of $100,000 on transactions processed through the SWIFT payment system on behalf of crypto exchange Binance.