• Silvergate Bank lost over $8 billion in deposits from its crypto customers at the end of 2022.
• The bank’s own data shows a rapid acceleration of its novel crypto-banking business, as well as how it was vulnerable to the industry’s drama.
• Silvergate’s data showed that the volume on its Silvergate Exchange Network and overall asset size peaked in 2021, before sliding in 2022 due to crypto sector dramas.

Silvergate Bank’s Crypto Business

Silvergate Bank is a La Jolla, California-based lender that experienced significant financial losses due to cryptocurrency-related events in late 2022. Its own data reveals that the bank had been rapidly expanding its digital assets business prior to this dramatic downturn. Furthermore, the bank has been subject to investigations by regulators and the U.S. Department of Justice, with ongoing audits expected to require restatements of its financials.

Volume High Point

The volume on Silvergate’s Silvergate Exchange Network hit a high point in early 2021, reaching $406 billion in transfers throughout the first half of the year before dropping to $230 billion by late 2022. Similarly, the bank’s overall asset size peaked at $16 billion during fourth quarter 2021 before declining to $11.4 billion according to its most recent report – still relatively small compared with mid-range community banks.

Regulatory Pressure

Silvergate has faced pressure from U.S banking watchdogs who have warned against such institutions concentrating their efforts on cryptocurrency activities – warnings which have since become reality for Silvergate and many other banks within this sector.

Implosion of Industry

The implosion of cryptocurrency industry caused a sudden evaporation of most deposits held by Silvergate – one risk among several identified by regulators which eventually came true for this specific bank institution .

Conclusion

Although Silvergate saw tremendous growth between 2020 and 2021 regarding digital assets banking and exchange network activity, it also became increasingly vulnerable as regulatory pressures mounted and industry drama unfolded towards late 2022 . As such ,the bank ultimately lost billions from customer withdrawals despite reaching peak performance at points throughout 2021 .