The rise and fall of Silvergate Bank: lessons for prudential regulation of crypto-sector banking

IF 1.3 Q3 BUSINESS, FINANCE
Mark Warren
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引用次数: 0

Abstract

Silvergate Bank began to “wind down operations and voluntarily liquidate” its bank in March 2023. Whereas Silicon Valley Bank and Signature Bank would be shut down by the Federal Deposit Insurance Corporation in the following days, this “crypto-sector bank” was able to satisfy depositor withdrawals and enter into voluntary liquidation. This paper examines how Silvergate Bank managed its balance sheet in a manner that maintained liquidity and its ability to satisfy substantial and unpredictable outflows from depositor withdrawals by its “crypto-firm” clients. Its approach was consistent with the ethos of the Basel III liquidity requirements to which many banks—though not Silvergate Bank—are subject. Yet the Silvergate model went further by recognising the idiosyncratic depositor dynamics of “crypto-firms”. This paper argues that prudential regulation should apply this model to (i) any bank that sources a substantial proportion of its funding from “crypto-firm” clients, irrespective of that bank’s size, and (ii) all deposits related to crypto-asset market participants at all banks.

银门银行的兴衰:加密银行业审慎监管的经验教训
银门银行于 2023 年 3 月开始 "结束运营,自愿清算"。硅谷银行(Silicon Valley Bank)和签名银行(Signature Bank)在接下来的日子里被联邦存款保险公司关闭,而这家 "加密行业银行 "却能够满足储户的提款要求并进入自愿清算程序。本文探讨了银门银行如何管理其资产负债表,以保持流动性,并有能力满足其 "加密公司 "客户因储户取款而产生的大量且不可预测的资金外流。其方法与巴塞尔协议 III 的流动性要求的精神是一致的,许多银行--虽然不是银门银行--都必须遵守巴塞尔协议 III 的流动性要求。然而,银门模式更进一步,承认了 "加密公司 "储户的特异性动态。本文认为,审慎监管应将这一模式适用于:(i) 任何资金大部分来自 "加密公司 "客户的银行,无论该银行的规模如何;(ii) 所有银行中与加密资产市场参与者相关的所有存款。
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来源期刊
CiteScore
3.70
自引率
6.20%
发文量
21
期刊介绍: Under the guidance of its highly respected Editors and an eminent and truly international Editorial Board?Journal of Banking Regulation?has established itself as one of the leading sources of authoritative and detailed information on all aspects of law and regulation affecting banking institutions.Journal of Banking Regulation?publishes in each quarterly issue detailed briefings analyses and updates which are of direct relevance to practitioners working in the field while meeting the highest intellectual standards.Journal of Banking Regulation?publishes the latest thinking and best practice on:Basel I II and IIIModels for banking supervisionInternational accounting standardsDeposit protectionEnforcement decisions in banking regulation and supervisionCross-border competition in banking servicesCorporate governance in banksHarmonisation in banking marketsSupervising credit riskAnti-money laundering legislation and regulationsMonetary integrationRisk capital and capital adequacySystemic risk in banking operationsCross-border regulationCross-border bank insolvencyModels for banking riskEssential reading for:central bankersbanking supervisorsfinancial regulatorsbankerscompliance officersheads of risk managementpolicy makersbank associationslawyers specialising in banking lawaccountantsinternal and external bank auditorsacademics and researchers
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