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JPMorgan Says Silvergate Collapse Will Test Crypto Industry

Press Releases Crypto News BeInCrypto JPMorgan Says Silvergate Collapse Will Test Crypto Industry

JPMorgan Chase said that the crypto industry would struggle to replace the services offered by collapsed banking partner Silvergate Capital Corp.

In a new report, a research team at the Wall Street titan said that crypto firms would be hard-pressed to replace the Silvergate Exchange Network’s 24/7 payment rails quickly.

Silvergate Competitors Face Mounting Pressure

With Silvergate going into voluntary liquidation, JPMorgan predicts customers will migrate to Signature Bank’s Signet payments network. Cryptocurrency firms can incorporate the Signet network into their platforms using application programming interfaces.

However, Signature also faces pressure to minimize crypto risks and recently announced that it would cut crypto deposits by $10 billion. Coinbase recently switched to Signature for its Prime customers.

Customers could also move to Customers Bancorp, which offers tokenized B2B settlements on its Tassat payments network using its CBIT token. JPMorgan also cites Metropolitan Bank as a potential destination.

To what degree Metropolitan Bank would be willing to assume new crypto business is unclear, as the bank recently announced the closure of its crypto vertical in 2023. It attributed the shutdown to “recent developments” in the crypto industry. Crypto-related firms made about six percent of all deposits.

Silvergate announced on March 8 that it would “wind down” operations and repay 100% of customer deposits. The bank was hit hard by several customer withdrawals at the end of last year.

Last week, it discontinued its Silvergate Exchange Network (SEN) payment rails for “risk” reasons following the departure of several major crypto firms, including Coinbase and Galaxy Digital Holdings. The bank emphasized that deposit-related functions are still operational. Crypto investors used SEN to move dollars between their bank accounts and crypto exchanges, provided both banked with Silvergate.