Silvergate Bank, a digital asset-focused bank, has discontinued its Silvergate Exchange Network (SEN), a crypto payments network that allowed round-the-clock transfers between investors and crypto exchanges. The decision was made after the bank raised doubts about the network’s viability. Silvergate stated that the move was a “risk-based decision,” but all other deposit-related services remain operational.
SEN, one of Silvergate’s most popular offerings, was an alternative to traditional bank wires, which often took days to settle. However, following the bank’s warning on Wednesday about its ability to operate as a going concern, cryptocurrency giants such as Coinbase Global Inc and Galaxy Digital dropped Silvergate as their banking partner.
Silvergate’s share prices had plummeted by over 97% from their all-time high in November 2021, and on Thursday, the bank disclosed that it had sold additional debt securities this year at a loss, resulting in the bank potentially being “less than well-capitalized.”
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Impact on crypto industry
The discontinuation of SEN has had far-reaching effects on the cryptocurrency industry. Stablecoin issuers Paxos and Circle, Cboe’s digital asset exchange, and crypto exchanges Bitstamp and Gemini have all suspended their partnerships with Silvergate. The bank’s share prices have also suffered as a result, with its shares slumping by over 2% in after-hours trading on Friday.
