Silvergate Bank recently announced the closure of Silvergate Exchange Network (SEN), which facilitated off-blockchain money transfers between major investors and crypto exchanges. The decision was made due to concerns about Silvergate Capital Corp’s ability to continue as a “going concern.”
With the discontinuation of SEN, analysts evaluate the network’s true value as a core part of the nascent crypto-markets infrastructure and explore alternative options, such as other blockchain firms or traditional banks, to fill the gap left by SEN.
SEN enabled accounts to transfer money at Silvergate instantly between each another, available 24/7/365, providing a highly convenient feature for crypto users who could transfer fiat currency outside traditional banking hours, much like how cryptocurrency markets operate.
Analysts have proposed various options to replace the terminated network, one of which is Signature Bank, a cryptocurrency-friendly financial institution in New York. Signature Bank operates Signet, a program introduced in 2019 that leverages blockchain tech to facilitate immediate settlements.
Signet is the only banking solution enabling swift U.S. dollar transfers to cryptocurrency exchanges similar to SEN. Moreover, BCB Group’s CEO Oliver von Landsberg-Sadie has disclosed that the company is hastening its efforts to incorporate U.S. dollar abilities into its payments processor to address the gap created by the termination of SEN.
BCB Group only facilitates transactions involving euros and British pounds, with no support for the U.S. dollar.
In the absence of SEN, traders are expected to revert to utilizing stablecoins, such as Circle’s USDC or Tether’s USDT, for quick trades. These dollar-pegged tokens are easily transferrable around the digital rails, and their usage is expected to increase with the closure of SEN.
The termination of SEN has left the crypto industry in uncertainty about its future. Although the immediate impact may not be significant, it is unfortunate that such a convenient service is no longer available. In the long run, the crypto industry will likely find alternatives to fill the gap, with blockchain firms and traditional banks stepping up to provide similar services to their clients.