Silvergate Seeks FDIC’s Help To Explore Solutions For Continued Operation
Silvergate, the California-based crypto banking institution, has reportedly talked with the Federal Deposit Insurance Corporation (FDIC) to avoid a potential shutdown. According to recent reports, the FDIC officials reportedly entered Silvergate’s headquarters last week to discuss how to salvage the crypto bank.
The news comes amidst reports of a growing list of banks closing their doors to cryptocurrency-related companies due to the industry’s perceived risk and lack of regulatory clarity. Silvergate has succeeded, but the recent rise in regulatory uncertainty has put it in a precarious position.
A Rescue Mission From FDIC
According to individuals aware of the situation, the Federal Deposit Insurance Corporation has been consulting with executives to explore potential solutions for rescuing the firm. The FDIC is a U.S. government organization overseeing financial entities for customer safety, reliability, and protection.
The FDIC inspectors came to the company’s main office last week. According to a Bloomberg source, they had been surveying the company’s accounts and documents.
However, a conclusion has yet to be made by Silvergate on how it will manage its financial difficulty. The presence of the FDIC does not necessarily mean that a solution can be reached with the agency’s involvement, a different source stated.
Silvergate Shares Plummet As Company Delays 10-K Filing
Silvergate’s stock declined significantly last week following the company’s revelation of a postponement in the filing of its 10-K statement. This document will give a detailed account of the firm’s operations and financial situation.
At the moment, Silvergate declared that it was assessing the repercussions of market instability and various noteworthy insolvencies in 2022 on “its capacity to remain in business.” There is excellent hesitance about Silvergate’s monetary condition, prompting fears of a potential bankruptcy filing that could be detrimental to other businesses in the sector.
Within a day of its 10-K delay declaration, Circle, Coinbase, Bitstamp, Paxos, and Galaxy Digital, made known a decrease in their relationships with Silvergate. Furthermore, Tether, MicroStrategy, and Binance rejected having any substantial connection to the bank.
How the talks between Silvergate and the FDIC will play out remains unknown. However, if the bank can agree with the agency, it would be a significant win for the crypto industry.
It would signal that regulators are willing to work with cryptocurrency companies to ensure compliance with their regulations.
Editorial credit: Formatoriginal / Shutterstock.com
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