Latest Developments and Updates in the Crypto Industry
Silvergate's Liquidation, Biden's Proposed Crypto Tax Rules, and Coinbase's Revolutionary Wallet-As-A-Service Platform
Silvergate
On Wednesday, Silvergate Capital Corporation decided to disband its banking operations and undergo a liquidation process. As one of the key banks serving the crypto industry and Signature Bank, the announcement sent ripples throughout the market. However, the liquidation plan has been structured to ensure that all deposits will be fully repaid to clients.
Recent developments leading to this decision have been attributed to the centralized exchange FTX and Alameda Research. Silvergate, a financial infrastructure services provider to some of the world's largest crypto exchanges, mining companies, and institutional investors, has advised clients to seek alternative solutions or sell off their positions to reduce their exposure.
In related news, on March 2nd, FTX suffered a massive shortfall in assets and fiat currency holdings. Early estimates suggested that billions of dollars could be recovered, but it was later revealed that the exchange had less than $700 million in liquid assets. As a result, FTX recorded losses of $8.6 billion across all wallets and accounts.
Crypto tax rule updates
President Biden has put forth a groundbreaking proposal for a new budget that aims to address the environmental impact of crypto mining. Under this proposal, crypto miners would be subject to a 30% tax on their electricity usage, which would be phased in gradually over three years at a rate of 10% per year, ultimately reaching the maximum 30% threshold. As part of this tax, crypto miners must also report on the type and amount of electricity they use and its value. The rationale behind this proposal is that crypto mining has a detrimental effect on our environment, and this measure seeks to mitigate those negative consequences.
Biden has proposed doubling the capital gains tax and tightening crypto wash sales regulations. This tax loophole is widely used by traders who sell and immediately buy back digital assets to minimize their tax burden. While wash sales are prohibited for stocks, current regulations do not classify crypto similarly.
What’s Happening in Crypto
As per the USDC Reserve Report, Circle had a certain amount of cash held in a now-closed-down Silicon Valley Bank, the exact amount of which was not disclosed. SVB was included in the list of financial institutions responsible for maintaining the platform's reserves. Circle also mentioned the Bank of New York Mellon and Silvergate as other financial institutions involved in this process.
Coinbase, the leading crypto exchange, has recently launched a cutting-edge wallet-as-a-service platform that promises to revolutionize the onboarding experience for the next wave of web 3 customers. The platform offers a unique and seamless wallet onboarding experience that can be leveraged by any company seeking to integrate a wallet into their app without being a burden to the end user. In my experience, setting up a crypto wallet can be complicated, particularly for those unfamiliar with the technology. It requires considerable time researching and downloading a non-custodial wallet, setting it up, creating a wallet, and noting down the seed phrase. Coinbase's innovative service represents a significant stride toward mass cryptocurrency adoption.
I hope you're all enjoying my crypto and digital asset newsletter! I'm eager to hear your thoughts on any subjects you'd like me to dive into over the next few weeks. Feel free to share your ideas with me!
Not Financial Advice
Please note that all opinions in my newsletter are strictly my own and should not be considered financial advice. It is important to conduct your own research and make your own investment decisions. Always consult a qualified financial advisor before making any investment decisions.