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Financial services regulators should treat cryptocurrency trading for what it is — another form of wagering, some experts say. But banks seeking to provide custody and many other services tied to digital assets would face even tighter restrictions under that approach.
Nations that consider banking their treasuries on speculative instruments should take heed.
When U.S. banks fell like dominoes during the Great Depression, the cause was often a classic run: Depositors withdrew cash en masse amid fears that lenders were amassing huge losses on bad loans and investments. The cryptocurrency era just put a new twist on that.
Shares of Silvergate tumbled after the bank said it fired 40 per cent of its staff and lost $1 billion selling securities to cover $12 billion in customer withdrawals.
Silvergate Capital made one of the U.S. banking world’s biggest bets on crypto. Now it’s reeling from a run on deposits and a massive loss, intensifying fears the collapse of FTX may seep elsewhere into the financial system.