Crypto Companies Navigate Federal Bank Charters Under Regulatory Pressure
The collapse of Silvergate Bank has left crypto companies wondering whether obtaining a federal bank charter provides them with adequate protection from Washington.
Silvergate's former CEO, Alan Lane, stated that the bank survived withdrawals of approximately 70% of its demand deposits before being forced to liquidate under political pressure.
Lane attributed the decision to liquidate on March 8, 2023, to the Biden administration's actions, which made continued operations 'untenable.'
The Federal Reserve's inspector general offered a different explanation in its September 2023 review, citing concentration in crypto-industry depositors, rapid growth, and funding risks as contributing factors.
Crypto companies are now obtaining federal trust-bank charters that put their custody businesses directly under the Office of the Comptroller of the Currency (OCC), creating a direct supervisory relationship with Washington.
The new charters reduce classic deposit-run exposure but shift focus to custody, compliance, and operational resilience.