Closure of Silvergate’s Instant Settlement Service May Increase Use of Stable Currency
On March 7, Kaiko, a market research company, said in a report released on Monday that the troubled Silvergate Capital decided to close its popular instant set…
On March 7, Kaiko, a market research company, said in a report released on Monday that the troubled Silvergate Capital decided to close its popular instant settlement service SEN among large investors, which will improve the role of stable currency and its issuer in encrypted transactions. Kaiko’s report said: “With the demise of SEN, stable currency may become more common among traders.” Kaiko predicted that traders would no longer use bank channels to deposit dollars in the cryptocurrency exchange, but transfer funds to the issuer of stable currency to obtain stable currency, and then deposit stable currency in the exchange. The report added: “But the problem is that the issuer of the stable currency still needs to access the cryptocurrency bank, so now the risk is further concentrated.”
Kaiko report: The troubled Silvergate may improve the role of stable currency in encrypted transactions
Interpret the above information:
In a report released on March 7, Kaiko, a market research company, stated that Silvergate Capital had decided to close its popular instant settlement service SEN among large investors. This closure is expected to have a significant impact on the role of stable currency and its issuer in encrypted transactions. According to Kaiko’s report, the closure of SEN would make stable currencies more common among traders.
The report suggests that traders may no longer use bank channels for depositing dollars in cryptocurrency exchanges. Instead, they may transfer funds to the issuer of stable currency to obtain stable currency, which they can then deposit in the exchange. While this may simplify the transaction process for traders, it has the potential to create additional risk in the system. The issuer of stable currency would still need to access the cryptocurrency bank, thereby increasing the risk.
Stable currency has gained popularity over the years, as it is pegged to a stable asset (such as the US dollar), making it less volatile than other cryptocurrencies. Its use has grown to the extent that cryptocurrency exchanges have even started to include stable currency trading pairs. The closure of SEN is expected to accelerate this trend.
Silvergate’s instant settlement service was popular among large traders, as it allowed for the quick transfer of funds between the bank and exchanges. Its closure is expected to cause inconvenience for traders and may increase the time taken to complete transactions.
In conclusion, the report by Kaiko highlights the impact of the closure of Silvergate’s instant settlement service SEN on the use of stable currency in encrypted transactions. The closure of SEN is expected to lead to increased use of stable currencies among traders. However, the additional risk created by the need for stable currency issuers to access cryptocurrency banks needs to be monitored.
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