Silvergate Bank has announced a net loss of $1 billion in the last quarter of 2022. It saw significant outflows of deposits in the last quarter of 2022 and took measures to maintain cash liquidity, including wholesale funding and selling debt securities.
The digital asset bank witnessed a transformational shift in the digital asset space. Silvergate Bank said a crisis of confidence throughout the ecosystem led customers to take a risk-off position on crypto trading platforms. The US Securities and Exchange Commission, in its report, outlined that the average digital asset customer deposits in the fourth quarter of 2022 were $7.3 billion – significantly lower than in Q3 where deposits were about $12 billion.
Silvergate is preparing for a sustained period of lower deposits. It is managing its expense base and evaluating its product portfolio and customer relationships. Alan Lane, Silvergate CEO, said they believe in the digital asset industry and remain committed to maintaining a highly liquid balance sheet with a strong capital position. But the digital asset bank laid off around 200 employees on January 5 in an effort to stay afloat.
Moreover, Silvergate shelved plans to launch a digital currency project – writing off $200 million used to purchase technology developed by the social media platform Facebook. Moody’s Investors, a rating firm, downgraded its rating of Silvergate Bank from lower-medium grade to Ba1.