- Silvergate is talking to FDIC regulators to find a way to avoid collapse as its finances worsen, per Bloomberg.
- The crypto bank flagged doubts about its survival and closed its flagship SEN payments service last week.
- Shares in Silvergate have tumbled as worries about the key industry player have mounted.
Troubled crypto-friendly bank Silvergate Capital is talking with US regulators to find a way to avoid going out of business, as fears grow for the key player in the digital-asset industry, Bloomberg has reported.
Officials from the Federal Deposit Insurance Corp. visited Silvergate’s headquarters in California last week to meet its management team, Bloomberg reported Tuesday, citing people familiar with the matter.
Silvergate, which used to be the go-to bank for the biggest names in crypto, said last week it was evaluating its ability to continue as a going concern. The industry favorite’s finances have been hit hard by last year’s digital-asset rout and by the fallout from its client FTX’s collapse.
One way to help Silvergate stay afloat discussed in the FDIC meeting was to gather crypto investors to help the bank boost its liquidity, per Bloomberg. The institution saw its deposits fall by over 50% in the three months to December 31, to $6.3 billion.
But the company has yet to determine how to manage its worsening finances, and the FDIC officials are examining its books, the report said.
Since the crypto bank’s client deposits are insured by the US government, the FDIC could be key to finding a viable solution to its predicament. The agency insures deposits of clients in banks and handles receivership — a process where it steps in to manage a troubled company — for those institutions.
Last week, Silvergate delayed filling its annual report with the Securities and Exchange Commission because it said it needed more time to look into how badly its finances have been hit by the events battering the crypto world.
On Friday, the bank scrapped its Silvergate Exchange Network, seen as another sign it was thinking about winding down its business.
The payment service provided quick transfers between investors and crypto exchanges possible at any time, unlike traditional bank wires that typically take a few days to go through. That made it a key part of the crypto industry.
“The SEN is Silvergate’s main flagship product that previously was the key attraction for depositors to bring funds to the bank,” analysts at Wedbush told Reuters.
Shares of Silvergate have dropped over 60% since their close last Wednesday, adding to a slump that has seen them fall almost 96% in the past 12 months as more than a dozen of its crypto firm customers shut down, were fined or came under investigation. They were tipping a little higher in premarket trading Wednesday, up 0.7% at $5.25.
Silvergate didn’t immediately respond to Insider’s requests for comment, made out of regular office hours. The FDIC directed Insider to the Federal Reserve, the bank’s primary regulator, which didn’t immediately respond to a request for comment.
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