Cryptocurrency Companies Seek to Ease Concerns over Silvergate’s Liquidation
WHAT YOU SHOULD KNOW
- Binance and Coinbase confirm customer funds are safe
- OKX’s President predicts slow adoption of cryptocurrencies
- Regulatory barriers contribute to concentration risks in the sector
Several cryptocurrency companies have sought to ease concerns regarding a potential financial contagion after Silvergate Capital announced its decision to liquidate its assets. Binance’s CEO, Changpeng Zhao, reassured customers that the exchange had not lost any assets at Silvergate and that all funds were safe. Similarly, Coinbase denied having any client or corporate cash at the bank. OKX’s President, Hong Fang, confirmed that corporate and customer funds were secure.
Despite the reassurances from prominent cryptocurrency companies, such as Binance and Coinbase, concerns over the potential impact of Silvergate’s liquidation on the industry’s adoption rate linger. OKX’s President, Hong Fang, predicts that the incident could slow down the adoption of cryptocurrencies.
The Crypto Council for Innovation links Silvergate’s downfall to regulatory barriers that discourage banks from providing deposit accounts to cryptocurrency firms, which increases concentration risks in the sector. As a result, the stock price of Silvergate Capital Corp dropped by approximately 38% to $3.06 on Thursday. Major cryptocurrencies, including Bitcoin, Ether, Dogecoin, and Cardano, all traded down between 0.5% and 1% on Thursday morning.
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