The White House will be closely observing the issue, the spokesperson said, but she won't be particularly commenting on Silvergate.
According to a White House official, the Biden administration is "informed of the situation" at Silvergate and will keep track of developments as they happen.
At a news conference on March 6, Press Secretary Karine Jean-Pierre claimed the White House had observed that Silvergate was another large cryptocurrency firm that had recently "had substantial challenges," but she refrained from going into additional detail about the company.
"Banking regulators have developed guidance on how banks should shield themselves against dangers linked with bitcoin," she continued.
The president has urged Congress to take action to protect normal citizens from the risk presented by digital assets, and he will do so in the future… ‘’Like with other cryptocurrency businesses, we won't talk about this specific company, but we will keep an eye on the news."
A number of significant cryptocurrency businesses and initiatives relied on Silvergate, a "crypto bank," as a crucial financial partner. But, at the beginning of March, after Silvergate missed the deadline for completing its annual 10-K report by two weeks, concerns of the bank's viability started to surface. A 10-K report, which is legally mandated, offers a thorough account of a company's operations and financial standing.
Following suit, a number of well-known cryptocurrency companies, including Circle, Paxos, Bitstamp, Galaxy, MicroStrategy, and Tether, to mention a few, severed connections with the bank or distanced themselves from it. Further, raising questions about the company's financial situation, they also stated on March 4 that it was closing down its digital asset payment network Silvergate Exchange Network owing to "risk-based" issues.
Due to this, Silvergate's stock price (SI) has fallen by around 60% since March 1, while the aggregate market capitalization of all cryptocurrencies has decreased by about 5.5% to $1.072 trillion during the same period.
Noelle Acheson, an economist and publisher of the Crypto is Macro Now newsletter, made the argument that Silverbank's connections to traditional finance could provide regulators with a much stronger justification than previously for cracking down on cryptocurrencies in an interview with CNBC on March 6. Acheson asserts, "Until recently, we have been able to argue that the consequences of everything that transpired last year were contained inside the crypto sector. Depressed, but bound." He declared:
The authorities will be able to claim, "Aha, systemic risk, we warned you so," if Silvergate fails. That will give them greater reason to attack cryptocurrency and tighten government restrictions on fiat access for cryptocurrency enterprises.
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