Silvergate executive: 'Sudden regulatory shift' led to bank closure

BlockBeats news, September 23, in a new bankruptcy filing, executives responsible for closing the crypto-friendly bank Silvergate Bank’s parent company said that despite the shrinking cryptocurrency industry and rising interest rates, the bank “has stabilized, is able to meet regulatory capital requirements, and is able to continue to serve those customers who retain deposits.”

However, in 2023, “sudden 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, at least in the first quarter of 2023, these institutions would no longer tolerate banks with a large number of digital asset customers, ultimately preventing Silvergate Bank from continuing its digital asset-focused business model.”

Silvergate Capital Corporation CEO Elaine Hetrick’s statement in the bankruptcy filing provided a timeline that led to the closure of Silvergate Bank on March 8, 2023, two days earlier than Silicon Valley Bank’s closure and four days earlier than Signature Bank was taken over by regulators.

The document also stated 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, primarily due to losses on the sale of long-term securities resulting from rising interest rates."