Silvergate Bank Collapse Sparks Controversy Over Blame

The sudden termination of services to crypto companies by Silvergate Bank earlier this month has sparked great debate over who is to blame for this sudden demise. Crypto businesses, desperate to find somewhere new to store their funds, have split into two camps. Some point their fingers towards the controversial SEC, while others blame the banks themselves for their own downfall.

Crypto companies have relied heavily on Silvergate for banking services for over two years now. But now, the bank is winding up its operation. In its official statement, the bank said that customer relationships have been terminated in accordance with regulatory guidance and that it had been “unable to continue its business in a manner consistent with safety and soundness.”

Some industry players are placing blame squarely on the shoulders of the SEC, claiming that the regulator’s stringent regulations scared Silvergate Bank and caused them to close their doors. However, the SEC has strongly rejected those claims, saying that Silvergate must have had some internal issues to have voluntarily ended its operation.

Others are pointing towards Silvergate itself, and the lack of a robust customer service system. Crypto companies have long complained about Silvergate’s long delays in responding to customer inquiries. And a recent review of the bank revealed that its customer service system was lackluster at best when compared to other crypto-friendly banks. This suggests that the bank was perhaps ill-equipped to handle the inflowing customer inquiries and may have triggered the banks' demise.

Regardless of whose fault it was, crypto businesses now find themselves in a tricky spot. With Silvergate gone, firms will now have to look elsewhere for banking services. Fortunately, there are companies like PayPal that offer similar services. Plus, with the recent approval of a federal court-appointed receiver to BitMex, the crypto market may have a few new banking options springing up over the next few months.

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