Last year’s surprising collapse of crypto exchange partner FTX provoked a $8 billion increase in withdrawals and decided the bank’s destiny. Now it seems that the bank’s crypto subsidiary’s fate has come to the fore as surprisingly, silvergate bank has decided to shut down its crypto-focused subsidiary.
The bank, which has been engaged in the cryptocurrency space since 2013, has given strategic reasons for the closure. The decision to wind down the subsidiary was made by the bank’s board of directors after a careful study of the current market situation and long-term growth plans.
What led to the Decision?
The crypto market and Silvergate bank have witnessed many ups and downs in recent years following the FTX bankruptcy, which has impacted the bank’s profitability.
The decision to wind down the crypto subsidiary is part of a broader initiative by the bank to maximize the residual value of its assets, such as the disposition of its sole technology and tax assets to reciprocate capital to shareholders.
What Happens to the Holdings?
As part of the shutdown, the bank has unveiled that it will voluntarily liquidate all of its crypto holdings. The bank will collaborate with its clients to promise a smooth transition of these holdings to their preferred service providers. The bank has been a protagonist in the crypto space for many years and has built a strong position for facilitating innovative banking solutions to the crypto community.
Hence, the shutdown of Silvergate bank’s cryptocurrency service is a shocking incident in the crypto space. However, the bank’s intention to concentrate on its core banking business will allow it to better facilitate its customers. In the coming months, we are expected to witness more potential outcomes such as the sale of the holding company to a third party to reap its tax assets.