market

Silvergates voluntary liquidation turns a page in crypto

Silvergate said that it will voluntarily shutdown operations and liquidate the company in an orderly way while it is possible

March 9, 2023 - The crypto market took another hit overnight with the announcement of the Silvergate Bank’s voluntary liquidation. The bank released a statement saying that it will voluntarily shutdown operations and liquidate the company in an orderly way while it is possible. According to them, all customer deposits are to be paid in full. The Silvergate Bank’s shutdown has impacted the crypto market trading volume. The bank was one of the major fiat payment institutions for the crypto industry, which coupled with the FTX/Alameda Research collapse last year, has eroded crypto volumes. However, we see this voluntary and orderly shutdown as positive because it turns a page in crypto, after last year's negative events, while the volume issue may be partially addressed by other companies and stablecoins.

The risk of Bitcoins from Mt. Gox reimbursements being dumped in the market this month no longer exist. The deadline for the payment of Mt. Gox's rehabilitation plan has been postponed to April 6 from March 10. A court has granted permission for the rehabilitation trustee to change the base repayment deadline, meaning that repayments will happen between April 6 and Oct. 31. Moreover, The Mt. Gox Investment Fund, the bankrupt exchange’s largest creditor, has no plans to sell the Bitcoins it will receive in October, according to Bloomberg’s sources. We believe that the postponement of this deadline, and the largest creditor planning to hold the assets, will reduce the risk of significant BTC dump in the market this year.

The SEC chairman Gary Gensler’s view of Ethereum being a security was subtly attacked by the chairman of the Commodities and Futures Trading Commission (CFTC). Rostin Behnam told the US Senate Agriculture Committee that Ethereum is a commodity. Behman added that the CFTC would not have allowed the Ether futures product to be listed if it did not feel strongly that it was a commodity asset. Moreover, he stated that his agency has serious legal defenses to support their case. In our view, the increasing criticism against the SEC’s approach to regulate crypto coming from authorities is a sign that the Gensler’s agency is closer to its limits regarding crypto matters.

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