Silvergate Was Forced Into Liquidation by Biden Admin: Nic Carter

Carter is convinced that it was part of “Operation Choke Point 2.0.” Meanwhile, Vice President Kamala Harris has started showing cautious support for blockchain and digital assets. However, Coinbase’s lobbying group, Stand With Crypto, retracted its initial pro-crypto rating for Harris after community backlash. The upcoming 2024 election could have a huge impact on the crypto market, with analysts offering mixed predictions on how a Harris or Trump victory will affect crypto prices.

Nic Carter Accuses US Regulators of Targeting Crypto Banks

Crypto-friendly Silvergate Bank might have survived if it was not forced into voluntary liquidation by US regulators, according to Nic Carter, a partner at Castle Island Ventures. In a recent article, Carter argued that Silvergate was on track to recover from its financial troubles, but government pressure accelerated its demise. He claimed the Biden administration instructed Silvergate to cap crypto deposits at 15%, and believes this restriction ultimately contributed to the bank’s downfall.

Carter specifically referred to Silvergate’s bankruptcy filings and insider conversations that revealed the bank was given an ultimatum to comply with the 15% limit or face severe consequences. For Carter, this was further evidence of “Operation Choke Point 2.0,” which is a term he coined in March of 2023 to describe what he sees as a government effort to discourage banks from working with cryptocurrency firms during the banking crisis of that year. He is convinced that this regulatory crackdown both initiated and exacerbated the 2023 banking crisis.

Crypto companies depend on banks for deposits, customer onboarding, and paying expenses, which makes the closure of crypto-friendly banks like Signature Bank and Silicon Valley Bank particularly damaging. Carter shared that these banks faced immense pressure from the Federal Deposit Insurance Corporation (FDIC) and US lawmakers, including Senator Elizabeth Warren, who scrutinized their relationships with FTX.

A Silvergate insider told Carter that the bank had no choice but to comply with the 15% rule, and stated, “When your primary regulator threatens you, you comply.” Carter also found it very suspicious that Silvergate chose voluntary liquidation rather than entering FDIC receivership, which is a rare move in banking history. He argued that this decision also pointed to regulatory pressure as the true cause of the bank’s closure, not the bank run it experienced.

Despite these challenges, Carter believes Silvergate could have recovered, especially considering the rebound in crypto markets during the second half of 2023. He suggested that, without the 15% limit, Silvergate would likely be thriving today. 

While he still acknowledged that Silvergate had its faults, like insufficient money-laundering controls and failing to detect FTX’s improper transfers sooner, Carter fully believes that the bank did not deserve to be “harassed out of existence.”

Harris Pledges US Leadership in Blockchain and AI

Now that Biden stepped out of the presidential race, it seems like Kamala Harris might be a bit more open to embracing the blockchain sector. Harris even recently made a public statement in support of protecting and promoting the cryptocurrency industry as she believes it is crucial for the United States to remain dominant in blockchain, artificial intelligence, and other emerging technologies. 

Harris speaking in Pittsburgh (Source: YouTube)

In a speech at The Economic Club of Pittsburgh on Sept. 25, Harris outlined her vision for investing in key sectors like biomanufacturing, aerospace, AI, and blockchain, while also expanding America’s leadership in clean energy innovation and manufacturing. She placed a lot of emphasis on the fact that the next generation of technological breakthroughs should be both invented and built in the US by American workers.

Harris was very quiet about her stance regarding cryptocurrencies, but made her first supportive remarks on digital assets during a Sept. 22 fundraising event. She advocated for encouraging new technologies, including digital assets, but still plans to prioritize consumer protections. Her economic plan was released alongside the Pittsburgh speech, and briefly mentions digital assets. Harris also pointed out the importance of the US keeping its competitive edge over other countries, especially China. 

Analysts have offered mixed predictions about the impact of the 2024 election on the crypto market. In a Sept. 19 research note, VanEck analysts speculated that a Harris victory might be favorable for Bitcoin in the long run, as it could accelerate structural issues that drive Bitcoin adoption. They also believe that Trump’s policies could be very bullish for the broader crypto ecosystem because of his pro-deregulation stance.

(Source: kamalaharris.com)

Bernstein analysts predicted that a Trump victory could push Bitcoin’s price as high as $90,000 by the end of the year. In contrast, a Harris win could see Bitcoin’s price fall to $30,000, according to their analysis. 

Stand With Crypto Retracts Harris’ Pro-Crypto Rating

Coinbase’s lobbying group, Stand With Crypto, has withdrawn its assessment of Kamala Harris as “supports crypto” after facing some serious backlash. The group ranks US politicians on their stance towards cryptocurrency, and initially gave Harris a “B” rating on Sept. 23, which indicated that she supports crypto. The score was based on the statement Harris made about encouraging technologies like AI and digital assets while still protecting consumers and investors.

However, Stand With Crypto decided to change their Harris rating after receiving a lot of criticism. The group ended up changing Harris’ profile to state that there is “not enough information” on her stance. The group’s executive director, Logan Dobson, explained on social media that the scoring system will now require more detailed statements from politicians before assigning a grade.

Despite the update, some figures in the crypto community, including Tierion founder Wayne Vaughan, argued that Harris’ administration has been the most anti-crypto in US history. Others, like Tom Shaughnessy of Delphi Digital and CoinList Co-founder Brian Tubergen, criticized the original score for being based on a vague, singular statement with very little detail.

On the other hand, Stand With Crypto rated Harris’ Republican rival, Donald Trump, as “strongly supports crypto” based on his promotion of non-fungible tokens (NFTs) and reported crypto earnings. However, Trump’s previous negative remarks about cryptocurrency, including calling Bitcoin a scam, are not fully reflected in his score either.

Exodus Donates $1.3M to Stand With Crypto PAC

Meanwhile, crypto wallet provider Exodus announced a $1.3 million donation to the Stand With Crypto Alliance’s political action committee (PAC) on Sept. 24 to support its mission of educating and mobilizing American crypto voters. The Stand With Crypto Alliance was launched in May of 2023 by Coinbase. 

One of its main goals is to empower the country’s 52 million crypto owners through political awareness. While the organization claims to have raised $180 million in donations, the Federal Election Commission reported only $13,690 had gone directly to the PAC by June 30. The alliance also advocates for crypto regulations, including the bipartisan “Financial Innovation and Technology for the 21st Century Act” (FIT21). 

Crypto voters are expected to play a much bigger role in the upcoming election. John Anzalone, a former Biden campaigner, shared that crypto voters could be a crucial swing group and advised candidates from both parties to engage with them. 

Harris vs Trump 2024 election odds (Source: Polymarket)

The presidential race between Vice President Kamala Harris and former President Donald Trump is still very close. Prediction platform Polymarket shows Harris has a slim lead of 50% over Trump’s 49%.