The closure of SVB, Silvergate, Silvergate Exchange Network, and Signature adds stress to a troubled crypto industry; fiat conversion costs may rise by 20%-40%
The digital-asset market is coming off of a turbulent year featuring a number of high-profile blowups.
The stress is cumulative, not new: Silvergate had already liquidated debt to cover withdrawals and cut staff when FTX blew up, and documents showed it served more than a dozen troubled crypto firms beyond FTX. With SVB also closed, the industry's dollar plumbing has effectively lost its specialist lenders in one stroke.
First-order effects
Crypto firms lose their primary instant-settlement corridors overnight, since both Signet and the Silvergate Exchange Network are gone — leaving them to route dollars through slower, costier banking relationships.
Second-order effects
Fiat-to-crypto conversion costs are projected to rise 20%-40% as trading volume migrates to whatever rails remain, squeezing exchange margins and pushing some flows toward offshore banks and stablecoins like USDC.
Third-order effects
If no US-regulated replacement emerges, dollar access to crypto fragments across offshore and stablecoin channels — deepening the [[/concepts#crypto-legitimacy-gap|legitimacy gap]] between US policy intent and where settlement actually happens, and accelerating [[/concepts#regulated-liquidity-fragmentation|regulated liquidity fragmentation]].
The trend: US crypto firms are losing their regulated banking rails faster than replacements can be built, pushing dollar settlement toward offshore banks and stablecoins.
Two things Silicon Valley, Signature and Silvergate all had in common other than the first two letters of their names: - Concentrated exposure to tech/crypto - Rapid growth in deposits As @John_Hempton said in an Odd Lots, there's nothing more dangerous than a fast-growing bank
The Regime has picked their scapegoat and sent out talking points to its comms teams. Don't believe their lies. This is failed interest rate policy and regulatory oversight, nothing to do with crypto. The only true “crypto bank” was assassinated last week with full reserves. http…
It's unfortunate to witness another crypto-friendly bank shut down, but we're relieved that depositors at #SVB and #Signature are safeguarded. It's important to note that #SignatureBank has no impact on KuCoin. We'd like to reassure our community that their funds remain secure.
It's not that these banks had a concentrated exposure to tech/crypto clients, as much as both industries had a surge in deposits/investments during ZIRP & the banks' just weren't on the radar of regulators. It was on the Fed to check which FI were effected by falling bond prices …
lessons i'm learning from crypto - don't store money in banks - don't store money in defi protocols - don't store money in crypto for that matter - it doesn't matter, you don't have any crypto left
Given Signature/Silvergate failures, any bank doing any sort of crypto-related work poses a systemic threat and faces a 24-7 regulatory colonoscopy. If there is no way to cash-in casino chips after gambling, people will stop going to casinos. Bye crypto. https://news.yahoo.com/..…