US bank Silvergate customers withdrew over $8bn of their crypto related deposits. Silvergate had to sell $5.2bn in assets after this incident.
Banks must be aware that holding Crypto assets and remaining liquid for customers is different to holding fiat currency for customers. People use fiat more often for neccessities and banks understand how the withdrawals work for this kind of asset. In Crypto, people have already made the investment to buy the Crypto and are ready to make more risky and sudden movements with their assets when they feel like it. Crypto assets need a higher percentage of liquidity at hand.
The withdrawals followed the collapse of the FTX crypto exchange, and the Crypto winter, which last year was the last 3 months of 2022.
Before entering Cryptocurrency in 2019, Silvergate was only a smaller bank in the US, but grew 1,500% by 2021. Today in 2023, they have laid off 40% (200) of their employees to deal with the major Crypto withdrawals.
More About Silvergate
Silvergate Capital (Silvergate) is the parent company of Silvergate Bank, the leading provider of innovative financial infrastructure solutions and services to participants in the nascent and expanding digital currency industry. We leverage our technology platform and our management team’s expertise to develop solutions for many of the largest U.S. digital currency exchanges and investors around the globe. Our solutions are built on our deep-rooted commitment and proprietary approach to regulatory compliance.
Headquartered in San Diego as a California state-chartered bank, Silvergate Bank has been profitable for each of the past 24 years. We began pursuing digital currency customers in 2013 and have been deliberate in our approach to serving this community since then. Today, we have 1,300+ digital currency and fintech customers that are using our platform daily to grow and scale their businesses.
