Digital Asset-Focused Bank, Silvergate, Halts Crypto Payment Network After Doubting Its Viability

JAKARTA - Digital asset focus bank Silvergate Capital Corp (SI.N) announced it has taken a "risk-based" decision to discontinue Silvergate Exchange Network, its crypto payments network, two days after the bank itself cast doubt on its viability.

"As of now, Silvergate Bank has taken a risk-based decision to discontinue the Silvergate Exchange Network (SEN). All other deposit-related services remain operational," said a Silvergate statement posted on its website.

Silvergate's crypto payment network, which is one of the bank's most popular services, allows 24-hour transfers between investors and crypto exchanges, as opposed to traditional bank transfers which often take several days to complete.

Silvergate shares fell more than 2% in post-exchange trading on Friday March 3, after closing up 0.9% in regular trading to $5.77. Silvergate shares as of Thursday March 2 have hit a record low, with a drop of more than 97% from their November 2021 peak.

On Wednesday March 1, Silvergate warned in a filing that it was evaluating its ability to operate as a sustainable company, and disclosed it had sold additional debt securities this year at a loss, and further losses could mean the bank was becoming "under-capitalized".

Following the warning, major crypto asset players such as Coinbase Global Inc and Galaxy Digital left Silvergate as their banking partner. Stablecoin issuers Paxos and Circle, digital asset exchange Cboe, and crypto exchanges Bitstamp and Gemini have also suspended their partnerships with Silvergate.