Silvergate is paring back its businesses after taking a $718 million loss in the fourth quarter selling debt securities to raise cash
Silvergate was able to survive such a steep decline in deposits because it isn’t structured like most banks. It sold off much of its traditional banking operations and branches to focus on providing bank accounts to crypto exchanges and investors. Crypto-related deposits account for some 90% of the bank’s total, and it keeps almost all of its deposits in cash or easy-to-sell securities.
The bank said it remains committed to crypto and has the funding to handle a “sustained period of transformation.” At the end of the fourth quarter, Silvergate said it had more cash on hand, $4.6 billion, than its $3.8 billion in remaining deposits. And it held another $5.6 billion in debt securities like U.S. Treasurys that could be sold quickly. Daily average volume on Silvergate’s network rose in the fourth quarter, the bank said.
“While Silvergate is taking decisive action to navigate the current environment, its mission has not changed,” the bank said in a statement. “Silvergate believes in the digital asset industry.”
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