Silvergate Bank: Crypto dreams lived fast, died young!
It’s not very often you see a cryptobank go under, but alas, just like all good things, that’s what has happened with Silvergate Bank. After a tumultuous two years where cryptobankers everywhere have faced a myriad of challenges, Silvergate Bank had to accept the inevitable and announced its voluntary liquidation.
What went wrong?
There is of course no simple answer to this question, but if we had to put it in a nutshell – the volatile nature of cryptocurrencies and the increasingly hostile regulatory environment made it impossible for Silvergate and the other crytpobanks to stay afloat.
It’s a shame, really. Silvergate Bank had made some groundbreaking progress in this short time it existed, particularly in the area of customer service. They had also invested heavily in security and anti-fraud measures, which undoubtedly made them stand out from the competition.
Will other cryptobanks follow in Silvergate’s footsteps?
Let’s hope not, but it’s hard to say for sure. On one hand, there are still some big players in the game like Circle and Kraken, who have been able to weather the storm so far. But on the other hand, we’ve seen a steady decline in the number of cryptobanks over the past two years, so who knows what the future holds?
What we do know is that cryptobanking had some bright spots, but also some heavy challenges that continue to persist. This could mean that this is just the beginning of a long dark period in the history of cryptobanking, possibly leading to more casualties in the coming months and years.
So what can be done?
At the risk of sounding like a broken record – regulation and education are key. Governments and policy makers need to understand the nuances of the technology and collaborate with industry experts to create laws that are fair, clear and in line with the objectives of the industry.
Likewise, the industry must do its part by educating the public and providing accessible products and services that cater to a wide array of customers.
In conclusion
Silvergate Bank’s voluntary liquidation marks an unfortunate moment in the history of cryptobanking, but it also serves as a reminder that the industry still has a long way to go before it will become a fully-fledged financial system.
For now, we should all keep an eye on the industry and focus our efforts on making it a safe, secure and legitimate alternative to traditional banking.
To this end, never forget: Regulation, education and collaboration are key!
