Explainer: Silvergate (crypto's bank) might fall, which could be bad for crypto

Why you should care: a lot of big money in crypto moved around via SEN, the Silvergate Exchange Network. The SEN meant that all exchanges and institutional clients banking with Silvergate could move money almost instantly between themselves and other clients.

For context: at the end of last year they had 1700 accounts there, FTX and related firms alone had 20 accounts. Since 2017, they have facilitated over $1 trillion in internal transactions. Silvergate also gave out loans to Saylor.

Exchanges that are or were part of the network: Kraken, BinanceUS, FTX, Gemini, Coinbase, Paxos, Genesis, Bitstamp, Circle, pretty much all big parties you can think of.

Silvergate's stock is down about 96% from its ATH (back at the end of 2021). It's now delaying its annual report and said it's re-evaluating its ability to operate as a going concern, and states it's "less than well capitalized".

Why this would hurt: exchanges and bigger parties all benefit from being able to move fiat quickly. It allows them to arbitrage, but also just generally allows them to banked, to take in deposits and such.

Now best-case scenario is they recapitalise. Worst case is they go under, and exchanges and such still have fiat deposited with them. Many exchanges and such are already looking for banking elsewhere, but this is becoming more difficult again with the US being much less friendly to crypto.

Does this mean crypto dies? No, obviously. But it would be a hit in liquidity in markets, and would be a hit to how easily exchanges can access and move around money. It's a story worth following.