The Alleged Connection between FHLBank and Silvergate’s Voluntary Liquidation
According to reports, the San Francisco Federal Housing Loan Bank (FHLBank) provided $4.3 billion to Silvergate at the end of last year, and did not force Silvergate to repay the advance payment. This is rumored to be the reason why the cryptocurrency friendly bank entered voluntary liquidation. A spokesman for the bank said, “FHLBank San Francisco has not requested or forced Silvergate Bank to prepay its outstanding prepayment. Silvergate has decided to prepay the outstanding prepayment based on its own assessment of its own situation.”
FHLBank: Silvergate did not stop lending
Analysis based on this information:
Reports have emerged stating that the San Francisco Federal Housing Loan Bank (FHLBank) provided Silvergate Bank with a $4.3 billion advance payment at the end of last year, without demanding repayment. This action is speculated to have triggered Silvergate’s decision to enter voluntary liquidation, which was announced recently.
According to FHLBank, they did not request or pressure Silvergate to repay the advance payment, and the bank chose to repay it based on its own evaluation of its financial position. While FHLBank denies any connection between its actions and Silvergate’s voluntary liquidation, the timing of the events raises eyebrows.
Silvergate Bank has recently become well-known for its cryptocurrency-friendly policies, which have attracted many crypto businesses to its services. The bank launched the Silvergate Exchange Network (SEN) in 2019, which allows clients to send and receive US dollars 24/7, while also supporting digital assets trading.
The link between FHLBank’s advance payment and Silvergate’s voluntary liquidation is not immediately clear. Some experts speculate that Silvergate Bank may have misjudged the strength of its financial position after receiving such a substantial amount of funding. On the other hand, others believe that FHLBank may have coerced Silvergate into accepting the advance payment, and then refused to demand its repayment, which placed the bank in a difficult financial situation.
Regardless of the reasons, Silvergate’s decision to cease operations is a significant loss for the cryptocurrency industry. The bank’s SEN, in particular, was widely considered a groundbreaking initiative that had helped to bridge the gap between traditional banking and digital assets.
In conclusion, while the exact reasons behind Silvergate Bank’s voluntary liquidation are still unknown, it is clear that the bank’s absence will be felt in the cryptocurrency industry. The allegations of FHLBank’s involvement in the situation add further uncertainty and raise several questions that require urgent clarification, particularly in the interest of fair and transparent banking practices.
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