Silvergate Suspends Dividends to Preserve Capital Amid Crypto Turbulence
• Crypto bank Silvergate announced it is suspending dividend payments on its Series A preferred stock.
• The company reported a $1 billion loss in the fourth quarter and has cut its staff by 20%.
• Silvergate shares fell more than 11% pre-market after the announcement.
Crypto-friendly bank Silvergate has recently announced that it is suspending payment of dividends on its series A preferred stock. This decision was taken in order to help preserve capital following the effects of recent turbulence across the crypto ecosystem. The news caused Silvergate shares to fall more than 11% in pre-market trading.
Silvergate reported a $1 billion loss in the fourth quarter and has cut its staff by 20%. This was due to the crypto bear market and the impact of the collapse of FTX, a crypto exchange. Silvergate’s board of directors will re-examine the company’s payment of quarterly dividends at a later date, depending on how market conditions evolve.
The move to suspend dividend payments on its series A preferred stock demonstrates Silvergate’s focus on maintaining a highly liquid balance sheet with a strong capital position as it navigates recent volatility in the digital asset industry. This decision was taken in order to ensure the long-term sustainability of the company, and to remain competitive in the crypto banking industry.
Silvergate is one of the few banks in the US that provides banking services to cryptocurrency businesses. It has seen tremendous growth over the past few years, with its total assets increasing from $2.2 billion in 2017 to over $3.5 billion in 2020. The company has also seen a rise in its customer base, with over 800 crypto-related companies now using its services.
Despite the recent news, Silvergate remains confident in its long-term prospects. The company is continuing to invest in technology and infrastructure in order to strengthen its position in the market. It is also expanding its services to include digital asset trading, custody, and securities clearing.
Although the news of dividend suspension is not ideal for investors, Silvergate is taking the necessary steps to ensure its long-term success. With a focus on maintaining a strong capital position, the company is well-positioned to remain competitive in the ever-evolving crypto banking industry.