Crypto Market: Silvergate’s Woes and BTC’s Tumble

The past week has been fairly quiet in the markets, and had it not been for BTC’s 5% drop in price yesterday, the same could be said for crypto.

The reason for this drop is likely to be found amid the uncertainty surrounding crypto-friendly bank Silvergate (NYSE:SI), which has had more than a rough time of late.

First, the bank was able to report a loss of around $1B due to the FTX saga, and yesterday the company announced that it would not be able to deliver its annual report on time, sending shares down 55%.

Therefore, it is increasingly uncertain whether Silvergate will weather the storm. The silver lining remains that the industry strengthens every time events like this happen, even if it brings negativity to the scene in the shorter term.

h2 Crypto Lens – Stablecoins under attack/t2

The amount of value sitting in stablecoins has fallen to its lowest point since May 2022. This decline has historically meant rising prices for other cryptoassets, but the latest drop can probably be attributed to the fact that the Securities Exchange Commission (SEC) took the first stab at stablecoins sector when it recently issued a Wells Notice to Paxos, the BUSD stablecoin issuer.

h2 Liquid Staking TVL Supasses DeFi/t2

Liquid staking, which allows users to earn rewards for locking their Ethereum (ETH) on the proof-of-stake (PoS) network, has seen a surge in popularity in recent months.

The total value of cryptoassets deposited in liquid stake protocols has now surpassed the value of decentralized lending and borrowing protocols, making it the second largest sector in the DeFi space.

According to data from DeFi Llama, total value locked (TVL) in liquid stake protocols was $14.1 billion as of Monday, while TVL in DeFi lending and borrowing protocols was $13.7 billion. Decentralized exchanges, with deposits of $19.4 billion, hold the top spot.

With the Ethereum Shanghai upgrade planned for this month, liquid stake derivatives (LSDs) are likely to attract even more capital in the near future

h2 Industry Shakers/t2

• Coin base unveils a Layer-2 blockchain

Coinbase (NASDAQ:COIN) recently launched Base, an Ethereum-focused layer-2 (L2) blockchain to simplify the creation of decentralized applications (dApps) for developers and streamline the user experience. As the second largest crypto exchange, Coinbase seeks to improve the utility of dApps and make them more accessible through their products.

• FTX Japan allows total withdrawal of funds

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While FTX customers around the world await the conclusion of the FTX and Sam Bankman-Fried (SBF) lawsuit, FTX Japan users have started withdrawing all their funds. A day after withdrawals were reinstated, FTX Japan revealed that close to ¥6.6 billion ($50 million) had been removed. Confirmations from several members of the community have established that all their money was paid out.

• FATF agrees on action plan to drive implementation of global crypto norms

The Financial Action Task Force (FATF) has developed a strategy to ensure rapid compliance with its global cryptocurrency standards, according to a report from its latest plenary meeting. The international watchdog highlighted that several nations have yet to follow the guidelines, including the “travel rule”. Although the FATF updated its crypto standards in 2019, last June it found that only 11 out of 98 regions surveyed enforced the travel rule and called for faster action.

• The Silvergate share crashes after the annual report is delayed

On Thursday, the value of Silvergate shares fell almost 50% after the firm revealed it was assessing its ability to remain a viable business. The disclosure of this information came with Silvergate’s admission that it would not be able to file its annual report with the Securities and Exchange Commission by the due date. Subsequently, the Coinbase exchange declared that it will no longer use Silvergate for dollar payments for institutional customers, and it will instead switch to Signature Bank (NASDAQ:SBNY).

• Australian central bank launches ‘live pilot’ of CBDC

In the coming months, Australia’s central bank will launch a “live pilot” of a digital central bank currency. This trial will include the use of offline payments, tax automation and a CBDC for Web3 commerce and will involve a number of participants, such as Commonwealth Bank (ASX:CBA), Australia and New Zealand Bank (ASX:ANZ) and payment providers such as Mastercard (NYSE :MA).

Written by:
Ulrik Lykke