Silvergate to shut down; 3AC founders advance OPNX plans
The biggest news in the cryptoverse for March 8 saw Silvergate Capital announce that its crypto bank will halt operations following earlier reports that it would attempt a recovery with the FDIC. Meanwhile, 3AC’s founders advanced a business model for their upcoming OPNX exchange and CFTC chair Rostin Benham said that stablecoins and ETH are commodities,
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Silvergate Bank will wind down operations and undergo liquidation, according to a March 8 press release from its holdings company, Silvergate Capital.
Silvergate said that bank operations will be halted in accordance with regulations.
It said that this course of action will involve a full repayment of all deposits. It also said that it is exploring how it can resolve claims and ensure the continued residual value of assets such as proprietary technology and tax assets.
The company said that it made this decision in light of “recent industry and regulatory developments” without naming any specific events.
Silvergate did not state whether it will submit a bankruptcy filing.
Failing crypto bank Silvergate is exploring ways to make a recovery with U.S. regulators, according to a report from Bloomberg on March 7.
Bloomberg reported that Federal Deposit Insurance Corp (FDIC) officials visited Silvergate’s California headquarters last week with authorization from the Federal Reserve.
Silvergate has not yet decided how to handle its financial issues, which began last week. However, the crypto-friendly bank could seek investments from elsewhere in the cryptocurrency industry in order to regain liquidity, according to the report.
Three Arrows co-founder Kyle Davis explained the business model of the soon-to-launch OPNX exchange, sparking skepticism from the crypto community.
Davies and Su Zhu met at Columbia University, founding 3AC in 2012. The firm operated as a crypto hedge fund, borrowing billions to fund its trading activities.
Following the USDT de-peg and subsequent market-wide liquidity drain, 3AC could not meet its margin calls and filed for bankruptcy in July 2022. Court filings showed creditors are owed $3.5 billion.
However, in January, it emerged that the duo, in conjunction with the CoinFLEX exchange founders Mark Lamb and Sudhu Arumugam, were seeking $25 million in seed money for a new exchange.
CFTC chair Rostin Benham said that various digital assets, including Ethereum and stablecoins, are commodities during a hearing on March 8.
During a hearing before the Senate Agriculture Committee, Benham said: “I’ve made the argument that Ethereum is a commodity…it’s been listed on CFTC exchanges for quite some time.”
Benham said that this provides a “jurisdiction hook” for the CFTC to regulate derivatives markets trading ETH as well as any underlying market.
In a March 7 Senate hearing committee on cryptocurrency and the environment, Senator Cynthia Lummis (R – Wyoming) emphasized that energy efficiency standards must not be utilized to target particular energy use cases like crypto mining.
During the committee, evidence was presented by both sides on how the crypto-asset industry impacts the environment.
Witnesses discussed energy consumption, efficiency, and the potential for overregulation in the industry. The hearing also touched on the negative effects of crypto mining sites on air, water, and noise pollution.
The United Kingdom Financial Conduct Authority(FCA) cracked down on crypto ATMs in the country and moved on to the east London region with the investigation, Reuters reported.
The FCA has been working with the police force from West Yorkshire to deal with the unregistered ATM installations in the city of Leeds. The FCA said it gathered evidence from “a number of sites” in the region for further investigation and might take legal action, according to Reuters.
The financial watchdog is now working with the Metropolitan Police to focus on illegal crypto ATM operations in east London. The operations are conducted under anti-money laundering (AML) regulations, which allow the police to enter premises without a warrant, observe procedures and request information or documents.
A new study by the blockchain infrastructure company Paxos shows that crypto owners see cryptocurrency as an investment and desire mainstream financial service providers to offer products and services that support it.
According to the survey released on March 7, three of the top five most desired use cases for crypto involve everyday financial transactions, such as payments and remittances.
The top 5 reasons respondents said they are interested in crypto are for remittances (34%), day trading (36%), credit card and/or loyalty rewards (38%), to pay for goods or services (42%), and as a long-term investment (52%).
MakerDAO, the governance token behind the fifth most popular stablecoin DAI, is contemplating an increase in its United States Treasury bond investments to $1.25 billion from its previous allocation of $500 million.
According to a proposal released March 6, the move would allow MakerDAO to capitalize on the current yield environment.
Under the new plan, the existing $500 million allocation – consisting of $400 million in Treasury bonds and $100 million in corporate bonds – would significantly increase by $750 million.
MakerDAO intends to achieve this by implementing a six-month U.S. Treasury ladder strategy, which would involve bi-weekly roll-overs.
In the last 24 hours, Bitcoin (BTC) fell 0.25% to trade at $22,002.41, while Ethereum (ETH) was up 0.3% at $1,551.13.
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