The voluntary liquidation of crypto-friendly bank Silvergate has sparked many to share their thoughts about the source of its troubles and the broader impact of the bank’s collapse on crypto.
From lawmakers to crypto analysts, crypto firm executives to commentators — nearly everyone’s had something to say regarding the recent announcement from Silvergate.
Some United States lawmakers have used the moment to make a comment about the state of the crypto industry, labeling it a “risky, volatile sector,” which “spreads risk across the financial system.”
Senator Elizabeth Warren called Silvergate’s failure “disappointing, but predictable,” calling for regulators to “step up against crypto risk.”
As the bank of choice for crypto, Silvergate Bank’s failure is disappointing, but predictable. I warned of Silvergate’s risky, if not illegal, activity—and identified severe due diligence failures. Now, customers must be made whole & regulators should step up against crypto risk.
— Elizabeth Warren (@SenWarren) March 8, 2023
Senator Sherrod Brown also chimed in, sharing his concern that banks who get involved with crypto are putting the financial system at risk, and reaffirming his desire to “establish strong safeguards for our financial system from the risks of crypto.”
The senators’ remarks have sparked criticism from the community, some of whom argue it was not a crypto problem and that fractional-reserve banking was to blame — as Silvergate held far more in-demand deposits compared to cash on hand.
.@SenSherrodBrown, you’re wrong that #crypto triggered Silvergate’s issue. What did it was $13.3bn in demand deposits that depositors cld withdraw in minutes, but only $1.4bn of cash. Had $SI held $13.3bn of cash, the bank run wouldn’t have impaired its capital. Not a crypto… https://t.co/nGlfHwUcBN
— Caitlin Long ⚡️ (@CaitlinLong_) March 8, 2023
Several companies have instead used the recent announcement from Silvergate to reiterate their lack of or now-severed ties with the firm.
Crypto exchange Binance’s CEO Changpeng Zhao assured customers on Twitter that they do not have assets stored with Silvergate, while peer exchange Coinbase has also assured its followers that no customer funds were held by the bank.
Update: We’re sorry to see Silvergate make the tough decision to wind down their operations. They were a partner & contributors to the growth of the cryptoeconomy. Coinbase has no client or corporate cash at…
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