Silvergate has announced the closure of its Silvergate Exchange Network (SEN). It would be a decision taken to limit the risks according to what the company said. It also clarifies that other depot-related services will not be affected by the closure of SEN.
Why was the Silvergate Exchange Network shut down?
The SEN was highly publicized by Silvergate in the past. Why does the company choose to close it? We learned by The Block that this is due to the downgrading of Silvergate’s credit rating by Moody’s. Remember that this is the second time in less than two weeks that this has happened. According to Moody’s, the poor rating attributed to Silvergate is due to insufficient capitalization. Of the ” governance deficiencies are also put in the balance. These shortcomings stem primarily from the fact that the company delayed the filing of its annual report. Afterward, Silvergate told the Securities and Exchange Commission that it was ” less than well capitalized“.
Despite the shutdown of its payments network, Silvergate would like to point out that the other deposit services remain operational. This statement has not stopped top-notch crypto companies from jumping the Silvergate ship. These include, for example, Coinbase, Paxos, Circle, Blockchain.com, GSR and Wintermute.
What consequences for the crypto industry after the closure of SEN?
The SEN exchange was Silvergate’s major service. The company itself has called SEN “the heart” of its service group for crypto clients. As a reminder, this service allowed customers to transfer money between them 24 hours a day. It even had the slogan ” Goodbye, normal banking hours. Hello, 24/7 “.
” This is an interesting event for the crypto industry. said KBW analysts led by Michael Perito. They question what crypto banking options might look like in the future.
Was stopping the SEN exchange the best thing to do at a time when US authorities want to do battle with crypto? But even more serious, will these authorities not take advantage of this failure to close the banking sector to cryptocurrencies ?
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