A new report by Nic Carter reveals how regulators ‘killed off’ Silvergate and Signature

Venture capitalist Nic Carter has released a new article that delves into claims regarding the Biden administration’s alleged informal mandate limiting banks’ cryptocurrency deposits to 15%. This directive, according to Carter, may have contributed to the collapse of key financial institutions, including Silvergate, Signature, and Silicon Valley Bank.

In his third report, published on September 25, Carter revisits themes from his earlier works on Operation Choke Point 2.0, shifting his focus specifically to Silvergate Bank, which provided crucial banking services to the cryptocurrency industry before its recent bankruptcy. He cites insights from protected sources and bankruptcy filings that imply Silvergate might have weathered its financial troubles had it not faced regulatory pressure. This pressure allegedly manifested as an informal directive that constrained the bank’s ability to maintain a larger proportion of crypto deposits.

Carter’s investigation underscores the broader implications of regulatory actions on the stability of banks involved in cryptocurrency, raising questions about the future of financial institutions that serve this burgeoning sector.

Nic Carter’s latest article outlines the intense scrutiny Silvergate Bank faced from regulators, particularly in the wake of its connections to FTX. He highlights how political pressure, especially from figures like Senator Elizabeth Warren, created a hostile environment that may have contributed to a bank run on Silvergate. Despite the lack of proven criminal wrongdoing linked to Silvergate, the atmosphere of suspicion surrounding the bank was significant.

Carter argues that this pressure culminated in the Federal Home Loan Banks refusing to renew Silvergate’s loan agreements, exacerbating its financial troubles. He quotes an unnamed insider from Silvergate who claimed that the bank felt compelled to comply with an informal 15% cap on crypto deposits due to regulatory threats. This situation underscores the opaque nature of regulatory oversight, as the existence of such a mandate remains unconfirmed and is considered confidential.

Carter further asserts that Silvergate’s voluntary liquidation, rather than an FDIC receivership, suggests that regulatory actions were a primary cause of its downfall, rather than just the bank run. He connects this narrative to the broader 2023 regional banking crisis, suggesting that the aggressive stance against crypto banks had far-reaching consequences that extended beyond the crypto sector itself.

In his analysis, Carter notes that other banks still involved in crypto, like Cross River and Customers Bank, have faced similar regulatory challenges, indicating a pattern of regulatory hostility toward crypto-affiliated institutions. He concludes by critiquing the lack of accountability for the political figures involved, suggesting that their actions inadvertently triggered a wider banking crisis.