Silvergate’s Crisis: How to Regulate Crypto to Protect Investors Against Such Liabilities?
- How the $1B Loss will affect Silvergate’s Activities
- Binance’s advice in backlash amid the most recent step taken by Ukraine
- Peer-to-Peer transactions
How the $1B Loss will affect Silvergate’s Activities
Due to doubts regarding its feasibility, Silvergate Capital has stopped operating its Silvergate Exchange Network (SEN), a system for cryptocurrency transactions.
SEN is among the most common options banks offer when it comes to digital assets. It allowed investors and cryptocurrency platforms to execute transactions whenever they wanted, compared to conventional bank transfers, which might require a few days to process.
Clients of Silvergate have started leaving the bank as unpredictability grows. They have advised consumers to move their assets away while also still guaranteeing clients their money is secure. In a declaration on 1st March, Silvergate, which experienced a $1 billion loss in the fourth quarter of the previous year and additional losses in Jan and Feb, stated that it might want to consider its sustainability.
The bank stated in an announcement that the U.S. Department of Justice (DoJ) and bank regulators are looking into the bank. However, it also doubted its capacity to keep operating as a “going concern” for the ensuing year.
Binance’s advice in backlash amid most recent step taken by Ukraine
Several cryptocurrency exchanges, including Kuna and Binance, have made public statements warning their clients of the difficulty resulting from their temporary ban from the Ukrainian central bank.
Investors’ ability to transfer money between and among exchanges has been impacted by the temporary restriction of the usage of the hryvnia, the national currency of Ukraine, for fiat deposits and withdrawals on cryptocurrency exchanges through banking cards.
Binance has reminded its customers of the value of P2P (peer-to-peer) services for cryptocurrency trading. With these services, users may trade cryptocurrencies without the need for centralized exchanges, and Binance’s P2P service enables them to do so while utilizing local currencies like the hryvnia.
Exchanges Kuna and Binance made formal notifications to alert their clients about the hardship when the National Bank of Ukraine temporarily restricted the usage of the hryvnia for fiat withdrawals and deposits on cryptocurrency exchanges using banking cards.
The creator of Kuna, a small-scale cryptocurrency exchange in Ukraine, Michael Chobanian, confirmed the outage and said he would give more information later. The usage of the hryvnia for fiat deposits and withdrawals on cryptocurrency exchanges in Ukraine has been temporarily suspended. Binance acknowledged the problem and advised using its P2P service as a workaround.
The exchange highlighted how P2P services let customers trade cryptocurrencies and fiat money directly with one another without using intermediaries such as banks. As a result, users in Ukraine can still safely utilize the site despite the regulatory disruption using Binance’s P2P service.
The country has received almost $70 million in cryptocurrency funding since the commencement of the Russian-Ukrainian crisis; thus, Ukraine’s harsh regulation on attitude seems surprising.
It would have taken several days to buy essential products if they had used the conventional financial system, according to Ukrainian Deputy Digital Minister Alex Bornyakov on 24th February. They managed to secure the acquisition, nevertheless, using cryptocurrency rapidly.
Also, he expressed astonishment that almost 60% of the vendors could accept cryptocurrency, which was unexpected; this demonstrates the potential advantages of cryptocurrencies for transactions, including quicker transaction times and wider business acceptance.
In cryptocurrencies, peer-to-peer transfers are the direct exchange of digital tokens or goods between two parties that do not require a go-between, including a bank or payment facilitator. With a blockchain, a distributed and decentralized database, a system of nodes execute and authenticates transactions in cryptocurrencies.
Both sides require virtual or digital wallets that handle the cryptocurrencies used for peer-to-peer crypto transfer.