Washington D.C., September 23, 2024 – In a recent bankruptcy filing, executives at Silvergate Capital Corporation, the parent company of the crypto-friendly bank Silvergate Bank, provided a timeline of events leading to the closure of the bank in March 2023. According to the filing, the bank’s decision to close was due to a combination of factors, including regulatory changes and rising interest rates.
The filing states that Silvergate Bank “has stabilized, is able to meet regulatory capital requirements, and is able to continue to serve customers who retain deposits.” However, this statement is somewhat contradictory to the bank’s closure in March 2023.
The timeline leading to the closure of Silvergate Bank is as follows:
* 2023: “Abrupt regulatory changes” from agencies such as the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) made it clear that these agencies would no longer tolerate banks with significant digital asset customers. This ultimately prevented Silvergate Bank from continuing its digital asset-focused business model.
* March 8, 2023: Silvergate Bank closed its operations, just two days before Silicon Valley Bank closed and four days before Signature Bank was taken over by regulators.
The bankruptcy filing also revealed that Silvergate’s consolidated business reported a net loss of $948.7 million for the year ended December 31, 2022, compared to net income of $75.5 million for the year ended December 31, 2021. This loss was primarily due to losses on the sale of long-term securities resulting from rising interest rates.
The closure of Silvergate Bank and other crypto-friendly banks has sent shockwaves through the financial industry and has raised concerns about the future of crypto banking in the United States. The bankruptcy filing provides insight into the events leading up to the closure of Silvergate Bank and highlights the challenges faced by banks in navigating the rapidly changing regulatory environment.
