In a new bankruptcy filing, executives at Silvergate Capital Corporation, the parent company of the crypto-friendly bank Silvergate Bank, have attributed the bank’s closure to a “sudden regulatory shift.”
Despite facing challenges from the shrinking cryptocurrency industry and rising interest rates, the bank had stabilized and was able to meet regulatory capital requirements. However, in 2023, “abrupt regulatory changes” from agencies such as the Federal Reserve, FDIC, and OCC made it clear that they would no longer tolerate banks with significant digital asset customers.
Silvergate Capital Corporation CEO Elaine Hetrick’s statement in the bankruptcy filing provides a timeline leading to the closure of Silvergate Bank on March 8, 2023, just days before other major banks, such as Silicon Valley Bank and Signature Bank, faced similar regulatory scrutiny and closures.
The filing also revealed that Silvergate’s consolidated business reported a significant net loss in 2022 primarily due to losses on the sale of long-term securities resulting from rising interest rates. This, combined with the regulatory challenges, ultimately contributed to the bank’s downfall.
