Silvergate failure draws attention of government exes and crypto community
The failure of the crypto-friendly bank Silvergate has sparked a conversation about who was responsible for the fall of the first domino and where crypto companies might go for their banking requirements.
The decision to voluntarily close down Silvergate Bank has prompted several people to voice their opinions on the causes of the bank’s problems and the broader implications of the failure of a bank that was favorable toward cryptocurrencies.
Several businesses have used the opportunity presented by Silvergate’s most recent declaration to restate that they have never had or do not now have any links with the company in question.
The CEO of Binance, Changpeng Zhao, assured clients on Twitter that the cryptocurrency exchange has no assets housed with Silvergate. Coinbase, a competing exchange, recently engaged in a staking ramble with the SEC, likewise assured its followers that the bank held no customer monies.
Meanwhile, Nic Carter, co-founder of venture firm Castle Island and crypto intelligence firm Coin Metrics, recommended that it was the authority that “hastened the collapse” of Silvergate by deploying investigations and legal attacks on it.
According to what he wrote, “They’re the arsonist and the fireman all rolled into one.”
Lumida’s CEO Ram Ahluwalia shared a similar view, tweeting that the senator’s letter eroded public distrust in Silvergate. “Silvergate was denied due process,” he added.
According to him, the US government allegedly utilizes the banking sector to arrange a sophisticated, comprehensive operation against the crypto economy, as Carter said in a previous blog post titled “Operation Choke Point 2.0.”
Remarks from government officials
At this time, several politicians in the United States have used the opportunity to remark on the current condition of the cryptocurrency business. They have called it a risky, volatile sector that “spreads risk throughout the financial system.”
Elizabeth Warren, a senator from Massachusetts, referred to the demise of Silvergate as “disappointing, but anticipated,” and she urged authorities to “stand up against crypto risk.”
Senator Sherrod Brown also stepped in, expressing his worry that financial institutions that become engaged with cryptocurrencies threaten the broader financial system and reiterating his wish to “create robust protections for our financial system against the hazards of cryptocurrencies.”
The remarks made by the senators have been met with backlash from the community. Some people in the community think that the issue was not crypto-related and that fractional-reserve banking was to blame for the situation, given that Silvergate held a significantly more significant number of deposits in demand than cash on hand.
The bankruptcy of Silvergate may be suitable for the cryptocurrency sector. However, still, it might hasten the departure of crypto enterprises from the United States if anticipated changes to tax regulations are implemented.