Silvergate Decision Could Drive Stablecoin Adoption Among Crypto Investors According to Kaiko Study

Silvergate Bank is a crypto-friendly bank. (Photo; Doc. Yahoo Finance)

JAKARTA - Digital asset data provider Kaiko recently released the results of a study, which found that the closure of its Silvergate Capital instant payment network could drive stablecoin adoption among investors in crypto trading.

Silvergate Capital, which was previously used by crypto exchanges and investors to move large amounts of US dollars, decided to shut down its payments network due to a "lack of sufficient capital." This decision then prompted crypto companies such as Coinbase and Kraken to leave the bank.

According to Kaiko, Silvergate's problems could affect crypto entities as access to the global banking system has always been a big challenge for them. However, the closure of the Silvergate payments network could help the stablecoin "become even more popular among merchants".

Kaiko predicts that investors will deposit their dollars with stablecoin issuers to receive stablecoin tokens before moving them to exchanges, rather than depositing them into exchanges using banking channels such as Silvergate SEN.

However, Kaiko also emphasized that stablecoin issuers still need access to crypto banks, so the risk is now more concentrated.

Additionally, the study found that stablecoins are gaining popularity among traders because they can help reduce volatility in the crypto market. A recent report also revealed that stablecoin trading volumes hit a record high in 2022, outpacing all major credit card providers.

The closure of the Silvergate Capital instant payment network could be a trigger for the growth of stablecoin adoption among investors in crypto trading. However, keep in mind that stablecoin issuers still need access to crypto banks, so the risk is now more concentrated.