that it had been forced to raise funds in a hurry and flog assets after digital-asset customers pulled almost 70% of their balances. It’s a disaster for Lane and his investors. For the U.S. banking system and households who rely on it, there is much to reassure.
While bad, it could have been so much worse. Silvergate hadn’t locked up customers’ deposits in loans, instead stacking itswith government bonds and other easy-to-sell assets. It has around $1.1 billion of approved lending commitments to customers, secured exclusively against bitcoin, but those have registered no losses.
Lane’s bank is nonetheless now a wisp of its former self. It has cut around 40% of its workforce, and back-burnered plans to launch a blockchain-based payment product. The shares are down 90% in less than six months. It’s embarrassing for sure. But for now, that’s all it is. If a go-to crypto bank can lose most of its deposits without failing or spreading chaos to other institutions, it suggests the firewall between digital and traditional finance is holding up.Silvergate Capital said on Jan.
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