The White House spokesperson has confirmed that the Biden Administration is “aware of the situation” at Silvergate, a troubled “crypto bank,” and will actively monitor reports on the matter.
The White House Monitors Troubled Crypto Bank Silvergate as Biden Urges Congressional Action
Although the spokesperson declined to comment specifically on Silvergate, they noted that banking regulators have released guidelines on how banks should protect themselves from risks associated with crypto. The spokesperson also emphasized that President Biden has repeatedly called on Congress to take action to protect everyday Americans from the risks posed by digital assets.
Silvergate was a key banking partner to a number of major crypto companies and projects. However, uncertainty over the bank’s solvency began to spread at the start of March, after Silvergate delayed the filing of its annual 10-K report. This delay, combined with concerns over the Department of Justice’s investigation into the firm’s involvement in the FTX collapse, prompted Coinbase and other crypto heavyweights to cut ties or distance themselves from the bank.
At Coinbase all client funds continue to be safe, accessible & available.— Coinbase (@coinbase) March 2, 2023
In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.
The Future of Silvergate Bank and Its Impact on the Crypto Industry
On March 4, Silvergate also announced that it was shutting down its digital asset payment network due to “risk-based” concerns, sparking further uncertainty over the firm’s financials. As a result, Silvergate’s stock price has plummeted roughly 60% since March 1, while the total combined market cap of crypto has dropped around 5.5% to $1.072 trillion in the same time frame.
Economist and author of the Crypto is Macro Now newsletter, Noelle Acheson, suggested that if Silverbank were to file for bankruptcy, it could give regulators a far greater excuse to clamp down on crypto than before, given the bank’s ties to traditional finance. Acheson warns that “If Silvergate goes under then the regulators will be able to say ‘aha, systemic risk, we told you so.’ That will give them even more ammunition to go after crypto and increase their choke on fiat access for crypto businesses.”
The situation at Silvergate underscores the need for greater regulatory clarity and oversight in the crypto industry. As the Biden Administration continues to monitor the situation, it remains to be seen what steps will be taken to address the risks posed by digital assets and ensure the protection of everyday Americans.
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In conclusion, the situation at Silvergate highlights the risks and uncertainties that exist in the cryptocurrency industry, particularly with regards to regulatory oversight. The White House’s monitoring of the situation reflects a growing awareness of the potential impact of such risks on everyday Americans and the need for action to address them. As the crypto industry continues to evolve and grow, it remains to be seen how regulators and stakeholders will work to ensure its stability and long-term viability.
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Frequently Asked Questions
What is Silvergate?
Silvergate is a "crypto bank" that was a key banking partner to a number of major crypto companies and projects.
Why did Coinbase and other crypto heavyweights cut ties or distance themselves from Silvergate?
Coinbase and other crypto heavyweights cut ties or distance themselves from Silvergate due to concerns over the Department of Justice's investigation into the firm's involvement in the FTX collapse.
What did Silvergate announce on March 4?
Silvergate announced on March 4 that it was shutting down its digital asset payment network due to "risk-based" concerns.
What could happen if Silvergate were to file for bankruptcy?
If Silvergate were to file for bankruptcy, it could give regulators a far greater excuse to clamp down on crypto than before, given the bank's ties to traditional finance.
What steps are being taken to address the risks posed by digital assets and ensure the protection of everyday Americans?
The Biden Administration is monitoring the situation at Silvergate and has repeatedly called on Congress to take action to protect everyday Americans from the risks posed by digital assets. However, it remains to be seen what specific steps will be taken to address the risks and ensure protection.