• Silvergate Bank is winding down its operations after announcing it would delay filing its annual 10-K.
• Jim Bianco, President of Bianco Research LLC, believes the crypto-friendly bank „had to be perfect“ in order to succeed in the industry and has now paid a heavy price for not meeting that standard.
• Silvergate’s holding company’s stock had already dropped 98% since November 2021 before their announcement and is expected to continue dropping.
Crypto-Friendly Bank Silvergate Forced To Liquidate Assets
Silvergate Bank announced this week that it would be winding down its operations due to “recent industry and regulatory developments”, roughly a week after it said it would have to delay filing its annual 10-K report due to questions from auditors.
Jim Bianco Believes Perfection Was Necessary For Success In The Crypto Industry
Jim Bianco, President of Bianco Research LLC., believes the crypto-friendly bank „had to be perfect“ in order to succeed in the industry and has now paid a heavy price for not meeting that standard. “Silvergate had to be perfect because of the industry they were in,“ he stated. „They weren’t and they’ve paid a heavy price for it.“ This sentiment was seen when Silvergate’s holding company’s stock had already dropped 98% since November 2021 before their announcement and is expected to continue dropping.
Pressure On TradFi Companies To Adopt Crypto Increases After Silvergate Announcement
Bianco also pointed out that with this news, crypto adoption by traditional financial companies (TradFi) just got harder. He noted that while these firms may have been hesitant before, they will now have even more reservations about joining the cryptocurrency space due to Silvergate’s failure despite its reputation as one of the most successful banks operating within cryptocurrency markets.
Liquidation Plan Announced By Silvergate Capital Corp.
Silvergate Capital Corp., parent company of SilverGate Bank, announced Wednesday afternoon that it would be „voluntarily liquidating“ assets as part of their shutdown plan. The exact details of how this process will take place are yet unclear but given recent events many believe this could spell trouble for other crypto focused businesses which may face increased scrutiny from regulators if similar issues arise in the future.
Conclusion
The news surrounding SilverGate’s liquidation is an unfortunate development for those looking towards furthering mainstream adoption of cryptocurrencies but also serves as a reminder that regardless whether you are working in traditional or alternative financial markets there are risks associated with any business venture and measures must always taken into account when planning accordingly.