On Thursday, there was a drop in shares of Signature Bank after the announcement that Silvergate Bank was shutting down its operations.
There was a 10% drop in Signature shares, as they fell to their lowest value of $92.40 per share in two years.
As for the stock price of Silvergate, it declined by 20% to reach a value of $3.88.
The announcement
The voluntary liquidation of Silvergate Bank was announced via a press release by its parent company on Wednesday.
It had cited regulatory concerns and the crypto industry’s situation as the reason for the decision. The announcement came after the bank said it was shutting down its SEN settlement service.
In the last week, several crypto companies have opted to step away from Silvergate in light of the regulatory concerns about it.
The companies
Nearly four crypto exchanges, which include prominent names like Gemini and Coinbase, announced that they would no longer process Silverbank payments.
Likewise, stablecoin issuers like Paxos and Circle also announced their changing relationship with Silvergate.
Galaxy Digital, an investment company, also disclosed that it no longer accepts Silvergate payments.
Likewise, companies such as Microstrategy and Tether also took to Twitter to alleviate concerns about their potential exposure to Silvergate. Last March, Silvergate gave a loan of $205 million to Microstrategy.
Silvergate’s issues
Last week, Silvergate had to file its annual financial report with the SEC, but it announced a delay, which saw its stock price plunge.
This indicated that the bank had incurred hefty losses in the last quarter of 2022 than previously reported.
The initial earnings report had shown assets of Silvergate valued at $11 billion in 2022, while Signature’s total assets had stood at $110 billion.
Silvergate’s announcement has also impacted the broader crypto market, tumbling crypto prices.
On Thursday, there was a 2.5% decline in Bitcoin, while Ethereum suffered losses of 1.6%. People would likely turn to Signature as a crypto banking partner.
But, the decline on Thursday shows that people are hesitant to deal with banks that are involved with crypto for the most part.
