From price crashes to reduced market cap, from bankruptcy declaration to reduction in staffing levels, the year 2018 wasn’t the best for Cryptocurrency. However, a recent report released by Silvergate Banks suggests that there was a surge in the number of clients coming into the field.
Per the report, the number of Silvergate Banks’ client making a shift into the cryptocurrency ecosystem was 544, a considerable increase to 2017’s 244. Moreover, total deposits showed growth by 8 percent, from $1.46 billion to $1.58 billion.
In stating the positive news, the bank also warned its users about risks involved in the space. The bank stated,
“Our business is subject to many substantial risks and uncertainties you should consider before deciding to invest in our common stock … including risks that that the digital currency industry may not gain widespread adoption, that legal and regulatory uncertainty regarding the regulation of digital currencies and digital currency activities may inhibit the growth of the digital currency industry, that our low-cost funding strategy may not be sustainable, that our deposits may be adversely affected by price volatility.”
The report further listed the factors that are affecting the development of the digital currency industry, including price volatility and the involvement of the Securities and Exchange [SEC]. The report explained:
“…government and quasi-government regulation of digital currencies, their use, and intermediaries and other businesses involved in digital currencies, noting in particular that the SEC has taken action against several cryptocurrency operators and has raised questions whether certain digital currency exchanges must be registered with the SEC to continue operating;”
It is not new news that SEC has been quite active and strict towards the field of cryptocurrencies, for instance, the SEC’s advisor for Digital Assets, Valerie Szcepanik, recently stated:
“I’ve seen stablecoins that purport to control price through some kind of pricing mechanism, whether it’s tied to the issuance, creation or redemption of another type of digital asset tied to it, or whether it is controlled through supply and demand in some way to keep the price within a certain band.”