{"id":404183,"date":"2023-06-02T18:13:01","date_gmt":"2023-06-02T18:13:01","guid":{"rendered":"https:\/\/insidebitcoins.com\/?p=404183"},"modified":"2023-06-02T18:13:01","modified_gmt":"2023-06-02T18:13:01","slug":"federal-reserve-demands-silvergate-to-cease-operations-safeguarding-depositors-and-ensuring-cash-preservation-what-lies-ahead","status":"publish","type":"post","link":"https:\/\/insidebitcoins.com\/news\/federal-reserve-demands-silvergate-to-cease-operations-safeguarding-depositors-and-ensuring-cash-preservation-what-lies-ahead","title":{"rendered":"Federal Reserve Demands Silvergate to Cease Operations Safeguarding Depositors and Ensuring Cash Preservation – What Lies Ahead?"},"content":{"rendered":"

On Thursday, June 1, the US Federal Reserve issued a <\/span>consent order<\/span><\/a>, ordering Silvergate Bank to implement its previous plans for voluntary self-liquidation.\u00a0<\/span><\/p>\n

The order ensures that Silvergate moves on with its March 8 plans to shut down operations to protect its depositors and the deposit insurance fund.<\/span><\/p>\n

The Federal Reserve also noted that Silvergate must not distribute capital, dissipate cash assets, and engage in other activities without regulatory approval.<\/span><\/p>\n

Silvergate Winding Down Due To Crypto Market and Regulatory Turmoil\u00a0<\/b><\/h2>\n

On March 8, the crypto-focused bank, Silvergate Capital, <\/span>announced<\/span><\/a> plans to shut operations and voluntarily liquidate.\u00a0<\/span><\/p>\n

That decision came after the bank incurred massive losses following the sudden implosion of the FTX exchange, plunging its shares by 35% in after-hours trade.<\/span><\/p>\n

Silvergate had warned a week before the sunsetting announcement that it was <\/span>evaluating its ability<\/span><\/a> to continue operations.\u00a0<\/span><\/p>\n

The bank disclosed that it sold additional debt securities at a loss this year, implying that it could be less capitalized.<\/span><\/p>\n

The California-based Silvergate Bank’s ordeal reflected the severity of the FTX collapse<\/a>‘s impact on the crypto asset industry.\u00a0<\/span><\/p>\n

In a statement, Silvergate said the decision to close shop was <\/span>\u201cthe best path forward,\u201d given \u201crecent industry and regulatory developments.\u201d<\/p>\n

Silvergate explained that the decision relates to its inability to cope with heightened regulatory scrutiny from banking regulators, congressional inquiries, litigations, and Department of Justice investigations.\u00a0<\/span><\/p>\n

The bank noted that its wind-down and liquidation plan would include full deposit reimbursement to depositors.\u00a0<\/span><\/p>\n

Silvergate also said it was considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.<\/span><\/p>\n

US Bank Regulators Warn Banks Of Risk Involved In Crypto<\/b><\/h2>\n

It is worth noting that over 90% of Silvergate\u2019s deposits came from crypto-related firms.\u00a0<\/span><\/p>\n

As such, the FTX’s bankruptcy in November last year threw depositors into panic, resulting in a classic bank run. <\/span>The deposit withdrawal run didn’t go unnoticed by US bank regulators.<\/span><\/p>\n

The Office of the Comptroller of the Currency and the Federal Reserve <\/span>issued a joint statement<\/span><\/a> in February, warning banks about liquidity risks resulting from crypto-asset market vulnerabilities.<\/span><\/p>\n

Silvergate\u2019s shutdown triggered the collapse of several traditional US-based banks, including Silicon Valley Bank and Signature Bank.\u00a0<\/span><\/p>\n

While US bank regulators and Federal Reserve said they want to safeguard depositors, others suggest they intend to scare off traditional banks from doing business with crypto firms<\/a>.<\/span><\/p>\n

Justin d\u2019Anethan, institutional sales director at Amber Group (a Singapore-based digital assets firm), <\/span>told<\/span><\/a> Cointelegraph:<\/span><\/p>\n

\u201cFor retail, if based in the US, it will be trickier. Ironically, in a bid to protect retail investors, regulators might stop them from getting exposure to an industry that\u2014if history is any guide\u2014keeps on growing and gaining adoption worldwide.\u201d<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

On Thursday, June 1, the US Federal Reserve issued a consent order, ordering Silvergate Bank to implement its previous plans for voluntary self-liquidation.\u00a0 The order […]<\/a><\/div>","protected":false},"author":1929,"featured_media":372114,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[7598,9103],"class_list":["post-404183","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-more-crypto-news","tag-crypto","tag-silvergate"],"acf":[],"yoast_head":"\nFederal Reserve Demands Silvergate to Cease Operations Safeguarding Depositors and Ensuring Cash Preservation - What Lies Ahead? - InsideBitcoins.com<\/title>\n<meta name=\"description\" content=\"The order ensures that Silvergate moves on with its March 8 plans to shut down operations to protect its depositors and the deposit insurance fund.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/insidebitcoins.com\/wp-json\/wp\/v2\/posts\/404183\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Federal Reserve Demands Silvergate to Cease Operations Safeguarding Depositors and Ensuring Cash Preservation - What Lies Ahead?\" \/>\n<meta property=\"og:description\" content=\"The order ensures that Silvergate moves on with its March 8 plans to shut down operations to protect its depositors and the deposit insurance fund.\" \/>\n<meta property=\"og:site_name\" content=\"InsideBitcoins.com\" \/>\n<meta property=\"article:published_time\" content=\"2023-06-02T18:13:01+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/insidebitcoins.com\/wp-content\/uploads\/2023\/01\/silvergate.png\" \/>\n\t<meta property=\"og:image:width\" content=\"930\" \/>\n\t<meta property=\"og:image:height\" content=\"523\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Anthonia Isichei\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Anthonia Isichei\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/insidebitcoins.com\/wp-json\/wp\/v2\/posts\/404183#article\",\"isPartOf\":{\"@id\":\"https:\/\/insidebitcoins.com\/wp-json\/wp\/v2\/posts\/404183\"},\"author\":{\"name\":\"Anthonia Isichei\",\"@id\":\"https:\/\/insidebitcoins.com\/#\/schema\/person\/2efc2116c72616ac0a11773577124f53\"},\"headline\":\"Federal Reserve Demands Silvergate to Cease Operations Safeguarding Depositors and Ensuring Cash Preservation – What Lies Ahead?\",\"datePublished\":\"2023-06-02T18:13:01+00:00\",\"dateModified\":\"2023-06-02T18:13:01+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/insidebitcoins.com\/wp-json\/wp\/v2\/posts\/404183\"},\"wordCount\":470,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/insidebitcoins.com\/#organization\"},\"image\":{\"@id\":\"https:\/\/insidebitcoins.com\/wp-json\/wp\/v2\/posts\/404183#primaryimage\"},\"thumbnailUrl\":\"https:\/\/insidebitcoins.com\/wp-content\/uploads\/2023\/01\/silvergate.png\",\"keywords\":[\"Crypto\",\"Silvergate\"],\"articleSection\":[\"More Crypto News\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/insidebitcoins.com\/wp-json\/wp\/v2\/posts\/404183#respond\"]}],\"copyrightYear\":\"2023\",\"copyrightHolder\":{\"@id\":\"https:\/\/insidebitcoins.com\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/insidebitcoins.com\/wp-json\/wp\/v2\/posts\/404183\",\"url\":\"https:\/\/insidebitcoins.com\/wp-json\/wp\/v2\/posts\/404183\",\"name\":\"Federal Reserve Demands Silvergate to Cease Operations Safeguarding Depositors and Ensuring Cash Preservation - What Lies Ahead? 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