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Closure of Silvergate Capital’s instant settlement service may boost stable currency usage

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On March 7, Kaiko, a market research company, said in a report released on Monday that the troubled Silvergate Capital decided to close its popular instant set…

Closure of Silvergate Capitals instant settlement service may boost stable currency usage

On March 7, Kaiko, a market research company, said in a report released on Monday that the troubled Silvergate Capital decided to close its popular instant settlement service SEN among large investors, which will improve the role of stable currency and its issuer in encrypted transactions. Kaiko’s report said: “With the demise of SEN, stable currency may become more common among traders.” Kaiko predicted that traders would no longer use bank channels to deposit dollars in the cryptocurrency exchange, but transfer funds to the issuer of stable currency to obtain stable currency, and then deposit stable currency in the exchange. The report added: “But the problem is that the issuer of the stable currency still needs to access the cryptocurrency bank, so now the risk is further concentrated.”

Kaiko report: The troubled Silvergate may improve the role of stable currency in encrypted transactions

Interpretation of the news:


Kaiko’s latest report revealed that Silvergate Capital, a well-known US bank for cryptocurrency-related businesses, has decided to shut down its instant settlement service SEN. This decision is expected to have a significant impact on large investors and improve the role of stable currencies and their issuers in encrypted transactions. According to Kaiko experts, with the decline of SEN, stable currencies are likely to become more common among traders.

As per the report, traders will no longer rely on bank channels to deposit dollars in cryptocurrency exchanges. Instead, they will transfer funds to the issuer of stable currency to acquire the same and then deposit it in the exchange. This way, they would be able to protect their trades from the significant price fluctuations of popular digital assets like Bitcoin and Ethereum. Trading using stable currency ensures that the traders are not exposed to such volatility risks while transacting.

Kaiko’s analysts have predicted that although traders may shift to stable currencies, the issuers of these currencies would still need access to cryptocurrency banks. Therefore, the risk of these digital assets would still be concentrated in a certain circle of institutions, eventually limiting the growth prospects of less established financial institutions in the cryptocurrency space.

The decision by Silvergate Capital has come as a surprise for several traders who used SEN to facilitate instant transactions for large amounts. However, the market experts opine that this may have been a strategic move by the bank to shift their focus to other revenue-generating opportunities in crypto banking.

In conclusion, the decision of Silvergate Capital to shut down its instant settlement service SEN has sparked new trends in the cryptocurrency market, particularly with respect to the usage of stable currencies by traders for lower volatility risks. However, this move has also thrown light on the existing risks concentrated around certain crypto banks and institutions that issue stable currencies.

Keywords such as Silvergate Capital, instant settlement service, stable currency, cryptocurrency exchange, and traders are essential to understanding the report’s key themes and implications for the cryptocurrency market.

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