Bitcoin (BTC) faced a 1-hour $1,420 pullback on March 3 following Silvergate Bank's 57.7% stock crash which was due to significant losses and "suboptimal capitalization." The U.S. fintech-friendly bank was a key financial infrastructure provider for exchanges, institutional investors and mining companies and some investors are worried that its potential demise could have wide-ranging negative impacts on the crypto sector.
The crypto-friendly bank discontinued its digital asset payment railway — Silvergate Exchange Network (SEN) — citing excessive risks. Silvergate also reportedly borrowed $3.6 billion from the U.S. Federal Home Loan Banks System, a consortium of regional banks and lenders, to mitigate the effects of a surge in withdrawals.
Among the impacted exchanges was Dubai-based Bybit, which announced the suspension of U.S. dollar transfers after March 10. The move follows Binance's international platform, suspending U.S. dollar fiat withdrawals and deposits on Feb. 6.
Fiat on and off ramps have always been a troublesome area due to the lack of a clear regulatory environment, especially in the U.S. Additional uncertainty came from the Wall Street Journal's March 3 report on iFinex, the holding company behind Tether and Bitfinex. Leaked documents and emails revealed the group relied on fake sales invoices and hid behind third parties to open bank accounts.
Despite a Wall Street Journal report alleging that Tether is being investigated by the Department of Justice, (USDT) is still the absolute leading stablecoin with a $71.4 billion market capitalization. The issue has spread across the industry as Paxos, the issuer of the third largest stablecoin, was ordered by the New York Department of Financial Services on Feb. 13
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