A lot of companies that banked with Silvergate have been out here talking about how they have minimal exposure to it, which is historically not a great sign. (See: Bankman-Fried’s notorious “FTX is fine. Assets are fine” tweet.)
But you know what? In this specific case, I’m inclined to believe them. First of all, just a fuckload of money has already left Silvergate. But second, SIlvergate was a pass-through bank for crypto; it didn’t hold onto reserves, and it didn’t pay interest. The problem here is less that some exchange or stablecoin is going to suffer a massive loss of customer money and more that it is now even harder for crypto companies to get banking.
The crypto industry desperately needs banks. But both of Silvergate’s competitors, Metropolitan and Signature, were pulling away from the sector even before this debacle. Metropolitan said in January that it was getting all the way out of crypto. And in December, Signature said it was going to get rid of $8 billion to $10 billion in digital asset-related funds. CR
I don’t know whether Silvergate is going to come through this. But I strongly suspect it has just gotten a lot harder to get into dollars from crypto and out of crypto into dollars
