The recent demise of crypto-friendly bank Silvergate will increase regulatory scrutiny over the relationship between the crypto industry and the banking sector in the United States.

The departure of the crypto-friendly bank Silvergate will have a significant impact on the crypto-ecosystem and its relationship with the US banking sector.

Earlier this week, the parent company of Silvergate Bank announced that it would cease operations and liquidate the bank. The announcement comes after the crypto-friendly bank suffered a $1 billion loss in the last quarter of 2022 following the collapse of the FTX crypto exchange, one of Silvergate’s top clients.

Silvergate is one of the few legitimate financial institutions that provide banking services to crypto companies and exchanges. His departure is likely to bolster US regulators’ arguments that crypto threatens the traditional financial system.

Earlier this year, US banking regulators issued a statement warning banks about the risks of operating crypto-related businesses.

However, crypto industry leaders have spoken out against this accusation, pointing out that the Silvergate debacle is more of a classic banking risk than exposure to cryptoassets.

As Caitlin Long, founder and CEO of Custodia Bank, explained, Silvergate could have survived the banking operation without much damage if it had enough money in its deposits to meet customer withdrawal needs.

For more on the causes and consequences of the Silvergate collapse, check out Cointelegraph’s latest video report on YouTube – and don’t forget to subscribe!

Source: CoinTelegraph