For months, US authorities have been racing to sever ties between banks and risky crypto ventures, worried the financial system could someday suffer serious losses. They may have been too late. Know more:
FOR months, US authorities have been racing to sever ties between banks and risky crypto ventures, worried the financial system could someday suffer serious losses. They may have been too late.
That could result in “being less than well-capitalized,” La Jolla, California-based Silvergate wrote in a regulatory filing. “The company is evaluating the impact that these subsequent events have on its ability to continue as a going concern.”SUCH an admission by a lender with federally insured deposits and more than $11 billion in assets will add to a debate among US lawmakers and regulators over whether banks can manage the risks associated with digital assets.
And even if that doesn’t happen, Silvergate’s travails will stoke even greater caution on the part of regulators, he said.In early January, three top financial regulators—the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp.—issued a blunt warning to banks that crypto-related risks that can’t be controlled shouldn’t be allowed to infect the banking system.
Silvergate waded deeper into the US policy debate when it revealed in early January how it was stabilizing its balance sheet after selling billions in assets to pay depositors. By the end of last year the firm held $4.3 billion in short-term Federal Home Loan Bank advances, a program originally set up under President Herbert Hoover to bolster mortgage lending.
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