TechFlow news — On September 23, according to The Block, Elaine Hetrick, Chief Administrative Officer of Silvergate Capital Corporation, disclosed in bankruptcy filings that a "sudden policy shift" by regulators at the beginning of 2023 was the primary reason for the closure of Silvergate Bank. Despite challenges from the shrinking cryptocurrency industry and rising interest rates, the bank had stabilized and met regulatory capital requirements.
Hetrick stated that agencies including the Federal Reserve, FDIC, and OCC made it clear they would no longer tolerate banks serving a significant number of digital asset clients, effectively halting Silvergate’s digital asset business model. The bank had rapidly expanded by serving crypto clients, growing deposits from $1.8 billion at the end of 2019 to approximately $14.3 billion by the end of 2021. Although the turmoil in the crypto sector during 2022 led to deposit outflows, Silvergate successfully weathered the run by selling long-term bond investments. Despite a net loss of $948.7 million in 2022, the bank still held assets exceeding deposits and met regulatory requirements at the beginning of 2023.
However, regulatory pressure forced Silvergate to consider changing its business model, selling, or liquidating. After evaluation, management announced on March 8, 2023, that it would wind down operations, becoming the first mid-sized bank to fail in 2023.
