Silvergate's Collapse Prolongs Crypto.com's Banking Problem

Crypto.com could be negatively affected by the multitude of crypto bank failures that have occurred over the past year.

The exchange has already lost the ability to provide banking services denominated in US dollars in the European Economic Area.

The CRO token has decreased by 82% over the past year.

Graph courtesy of TradingView

Crypto.com may only be the fourteenth largest cryptocurrency exchange in the world by volume, but it has a significant presence in the market. Matt Damon has been the face of its advertising campaigns for the past few years, which has contributed to the company's recent success. Since then, however, the crypto world has changed drastically, and the continuing decline of the crypto banking sector could spell trouble for Crypto.com.

What's the problem?

Silvergate, a cryptocurrency bank, announced on Wednesday that it will enter voluntary liquidation due to its untenable position following the collapse of FTX and subsequent industry sell-off. Due to its partnership with the exchange, the failure of Silvergate could have additional repercussions for Crypto.com's ability to receive fiat currency inflows.

The Singapore-based exchange has already lost the ability to offer USD-based banking services in the European Economic Area; it can now only accept deposits in EUR. Silvergate's demise has eliminated yet another access point for its crypto-banking services, and some believe that if this trend continues, the company will face liquidity issues.

Where stands Crypto.com?

Currently, the exchange holds approximately $3.6 billion in addition to $776 million worth of stablecoins. Alone last week, Crypto.com recorded net inflows of over $248 million. Therefore, the exchange division of the company does not appear to be in imminent danger. Despite having ties to the failed exchange, it was also able to survive the collapse of FTX. In spite of this, its native CRO token fell approximately 35% as the market as a whole collapsed.

Rival dispute Kraken is also planning to launch its own cryptocurrency bank this year, albeit at a less-than-ideal time, according to some. Regardless of the outcome of Crypto.com's banking arm, it is not alone in its uncertainty.