Silvergate Capital, the parent company to the crypto bank Silvergate, has announced it will be suspending Series A preferred stock dividends as it hopes to restructure following heavy loses and FUD surroundings its exposure to several now defunct crypto entities. 

The company said Jan. 27 that it was doing so to maintain liquidity on its balance sheet, all the while navigating a series of exposures to several of crypto’s most toxic entities, including FTX and Genesis. 

CEO of Silvergate Capital Alan Lane said in a statement:

In response to the rapid changes in the digital asset industry during the fourth quarter, we took commensurate steps to ensure that we were maintaining cash liquidity in order to satisfy potential deposit outflows, and we currently maintain a cash position in excess of our digital asset related deposits.

Silvergate Capital Corp. is traded on the New York Stock Exchange under the ticker SI. The Silvergate bank, founded in a small California town in 1988, rose to prominence as the banker of choice for many now null crypto firms, including FTX, who had an estimated $1.2 billion worth of deposits held in the bank at the time of its collapse last November. While Genesis, the digital asset prime brokerage founded by Digital Currency Group CEO Barry Silbert, now insolvent, also had assets with the bank totaling $2.5 million, it was reported. 

Compounding matters even further was a bank run that saw $8.1 billion worth of deposits withdrawn earlier this month in a decline of roughly 68%, forcing Silvergate to liquidate assets and lay off 40% of its staff. At the time, the company said there was a “crisis of confidence across the ecosystem.”

By the end of 2022, Silvergate said in a statement that they held more than $150 million worth of assets from customers who had filed for bankruptcy protection. 

After going public in 2019, shares of Silvergate rose to a high of $222 in November 2021, the same month, Bitcoin peaked at over $65,000 USD. Since then, Silvergate Capital shares have fallen to $12.68, more than 90% below their all-time high. 

EU lawmakers passed a law Jan. 24 that mandates banks invested in crypto to hold the euro equivalent of their crypto investments as capital, Reuters reported.

The requirement will come into force in January 2025 to give banks enough time to adjust their finances, according to Reuters. The bill was approved with the purpose of eliminating the instability within the crypto sphere.

EU Parliamentarian Markus Ferber said:

“Banks will be required to hold a euro of their own capital for every euro they hold in crypto. Such prohibitive capital requirements will help prevent instability in the crypto world from spilling over into the financial system,”

According to the Association for Financial Markets in Europe (AFME), the new bill does not have a clear definition of what a crypto asset is. Therefore, it could be applied to tokenized securities as well.

Since all EU states have approved the bill, lawmakers will start negotiating the final text with member states to finalize the official script.

Switzerland-based private bank Cité Gestion has reportedly teamed up with Taurus technology to tokenize and manage its company shares on the Ethereum blockchain.

As per Coindesk’s report, Cité Gestion will leverage Ethereum’s smart contract functionalities to create, distribute and manage the servicing of its shares.

Taurus said that the tokenization of Cité Gestion’s shares was executed in accordance with the Capital Markets and Technology Association (CMTA) standards.

Cité Gestion Deputy CEO Christophe Utelli remarked that the application of the CMTA standards will ensure that adequate risk management is considered while issuing the tokenized assets.

Utelli added:

“It was important for our bank to be among the first to take advantage of the new possibilities offered by Swiss law for the digitization of securities by tokenizing our own shares.”

Cité Gestion will reportedly become the first private bank to issue its own securities under Swiss law.

Since its inception in 2018, Taurus has helped over 15 companies tokenize their securities across Switzerland and Europe.

According to Taurus, the digitalization of private assets and securities will become the new standard.