CEO Announces Closure of Silvergate Bank Due to Regulatory Changes
Silvergate Capital Corporation CEO Elaine Hetrick shared in a recent filing that sudden regulatory changes led to the shutdown of the bank.
In the filing, Elaine Hetrick shared that 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.”
After the crypto industry witnessed notable collapses of Three Arrows Capital to FTX, causing deposits to contract and leading to Silvergate being able to manage by selling long-term bond investments at a huge loss.
The filing states, “Silvergate’s consolidated business reported a net loss of $948.7 million for the year ended December 31, 2022 as compared to net income of $75.5 million for the year ended December 31, 2021, which was mostly driven by selling long-dated securities impaired by rising interest rates”.
With regulation pressures doubling on banks serving crypto users, forced Silvergate to consider one of three options: revamp its business away from crypto customers, sell itself or shut down. As a result, the bank realized restarting the business and pursuing the sale would be too costly and announced their intention to cease operations on March 8, 2023, and it was the first midsize bank to do so in 2023.
Also Read: Silvergate Bank Declares Bankruptcy Amidst No Crypto Support
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