Tag: silvergate

India’s SVC Bank Clarifies Its Business is Safe as Some Confuse it With Collapsed SVB

India’s 116-year-old SVC bank was compelled to issue an official clarification regarding the status of its business after confused customers mistook it for US’ recently shuttered SVB — Silicon Valley Bank. The similarity in the acronyms of their names may have led to the confusion. Putting the minds of its users at ease, the SVC bank said it is ‘totally unrelated’ to the now defunct SVB. The California-based SVB catered largely to the IT companies located in the Silicon Valley tech hub, including crypto companies.

Established in 1906, the SVC Co-operative Bank was formerly known as the Shamrao Vithal Co-operative Bank. In the fiscal year 2021-2022, the Mumbai-headquartered bank said its total business stood at a net worth of Rs. 31,500 crore, having churned over Rs. 146 crore in profits.

The bank has warned people against spreading rumours suggesting its business is, in any way, linked to the collapsed Silicon Valley Bank.

“SVC Bank is completely unrelated to Silicon Valley Bank (SVB) that was based in California. We request our members, customers and other stakeholders not to pay attention to baseless rumours and mischief-mongering by unscrupulous elements insinuating similarities in brand names. SVC Bank reserves the right to take due legal action on rumour mongers for tarnishing its brand image,” the bank said in a prepared statement.

Within one week, the US witnessed three large crypto banks crumble under market pressure. Regulators who approved the closure of these banks said their unstable business status could have posed severe threat to the US economy.

The back-to-back downfalls of these crypto-friendly banks in the US, however, did manage to grasp the attention of the world, sounding a loud alert around the risks of crypto’s volatile nature.

On March 14, India’s state minister for technology — Rajeev Chandrasekhar— interacted with a group of start-ups to assess the impact of Silicon Valley Bank’s collapse on them.

To mitigate the financially damaging after-effect on the market, US authorities were quick to announce that all custodians linked to the collapsed banks will have access to their funds.

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Crypto Lender Silvergate’s Shares Slumps 29 Percent as Firm Delays Annual Report in Wake of FTX Fallout

Shares of Silvergate Capital Corp slumped 29 percent in premarket trading on Thursday, after the cryptocurrency-focused lender warned it was delaying its annual report and said it was evaluating its ability to operate as a going concern.

Silvergate (SI.N) reported a $1 billion (roughly Rs. 8,21,300 crore) loss for the fourth quarter as investors raced to withdraw deposits in the wake of crypto exchange FTX’s bankruptcy, and the firm’s troubles highlight the fragility of confidence in digital assets.

The company said it would be unable to meet an extended March 16 deadline for submitting its annual report. It also said, in a filing to the Securities and Exchange Commission, that it had sold additional debt securities to repay debts this year and that further loss mean the bank could be “less than well capitalized”.

Silvergate “is evaluating the impact that these subsequent events have on its ability to continue as a going concern,” it said. “The Company is currently in the process of re-evaluating its businesses and strategies in light of the business and regulatory challenges it currently faces.”

JP Morgan downgraded its rating on Silvergate’s stock to “underweight” from “neutral” and withdrew its price target, saying the sale of additional securities suggests that the firm is facing continued liquidity challenges.

“We now see elevated risk of further downside in SI shares given the outstanding risk that the bank is unable to remain a going concern,” JP Morgan analysts said in a research note.

Silvergate’s shares were trading at $9.57 (roughly Rs. 785) before the opening bell – on track to open at their lowest in nearly three years if losses continued. The stock has plummeted about 96 percent from its record-high close in November 2021.

Federal prosecutors in Washington are probing the La Jolla, California-based company and its dealings with FTX and trading firm Alameda Research. In January, three U.S. senators asked Silvergate for details about its risk management and FTX.

Wayne Huang, co-founder and CEO of XREX, a global USD-crypto exchange headquartered in Taipei, said the issues highlighted how interconnected and vulnerable crypto banking had become.

“This accentuates the importance of having a robust banking network for crypto firms, instead of the over-reliance on just several banks,” he said. Wider digital asset markets were relatively calm, though Bitcoin made little advance despite a drop in the U.S. dollar, last buying $23,457 (roughly Rs. 1926523).

“From what we gather, most crypto companies have had to already find banking elsewhere, hence we believe the damage is likely already done in terms of implications to the wider crypto market,” said Matthew Dibb, chief investment officer at cryptocurrency asset manager Astronaut Capital.

Global cryptocurrency exchange Binance had secret access to an account at Silvergate belonging to its purportedly independent U.S. partner and transferred large sums of money from the account to a trading firm managed by Binance CEO Changpeng Zhao, Reuters reported last month.

© Thomson Reuters 2023

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Silvergate Capital Delays Plans to Launch Its Own US Dollar-Pegged Stablecoin

Silvergate Capital, a crypto bank holding company, has decided to delay the launch of its long-awaited stablecoin, CEO Alan Lane said during the company’s third-quarter earnings call on Tuesday. California-based Silvergate Capital, the parent of Silvergate Bank, announced it was working on its own payments-focused stablecoin in January after acquiring related intellectual property, infrastructure and tools from blockchain payment network developer Diem Group. The delay is not due to technical issues, Lane said during the call, underscoring that the technology was ready when Silvergate acquired it from Diem.

“Unfortunately, we no longer expect that to happen this year,” Lane said. The technology is ready to go but the firm is “working with regulators and policymakers and making sure we get this right,” Lane elaborated. “We still feel very strongly that we are in the best position of any other bank out there to launch a regulatory-compliant, safe and sound, tokenised dollar on the blockchain,” he added.

Silvergate Bank is one of the largest crypto banks currently in the market. At the beginning of 2022, Silvergate Capital acquired the crypto technology from Diem, the stablecoin project of Meta platforms (formerly Facebook) launched earlier in 2019.

Silvergate has been offering loans to several crypto firms while accepting Bitcoin as collateral. Earlier this year, business intelligence firm MicroStrategy took a major loan from Silvergate while putting its Bitcoins as collateral.

MicroStrategy said that they will use these funds to buy more Bitcoins. This was also the largest loan secured by any Bitcoin holding company. Company CEO Alan Lane stated that he is still bullish about the Bitcoin lending business and expects it to grow with time.

However, with the broader market condition, Lane remains practical and expects the pain in the market to continue for a while. “Over the coming quarters, the crypto industry may still pose challenges for some exchanges and crypto funds. However, at some point, all that will be over, and then we will just be waiting for what is the next catalyst,” he said in an interview with CoinDesk in July.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.

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