• Crypto-friendly bank Silvergate announced its suspended payment of dividends on its series A preferred stock.
• The company’s shares fell more than 11% pre-market after the announcement.
• Silvergate is taking the move to help preserve capital following the effects of recent turbulence across the crypto ecosystem.
Crypto-friendly bank Silvergate has recently announced its decision to suspend payment of dividends on its series A preferred stock. This decision comes as the company continues to feel the effects of the recent turbulence across the crypto ecosystem.
The news has caused Silvergate’s shares to fall more than 11% pre-market, and the company is now taking the move to help preserve capital. Silvergate reported a $1 billion loss in the fourth quarter and cut its staff by 20%, showing the impacts of the crypto bear market and the collapse of FTX.
Silvergate has stated in a press release that the Board of Directors will re-examine the company’s payment of quarterly dividends at a later date, depending on how “market conditions evolve.” The move to suspend the dividend payments is intended to maintain a highly liquid balance sheet with a strong capital position for the company as it navigates the recent volatility in the digital asset industry.
Silvergate is not the only player in the crypto space that has been affected by the turbulence of late. Other companies, such as Coinbase and Binance, have also seen their share prices take a dive in the weeks following the FTX crash.
However, Silvergate’s decision to suspend dividend payments implies that the company is feeling the impact of the recent events more than most. The company may be hoping that by taking this measure, it can help to preserve capital and ride out the storm until the markets stabilize.
In the meantime, investors should be aware of the risks associated with investing in crypto-related businesses, as the industry continues to be highly volatile. As always, investors should conduct their own research and due diligence before investing in any asset class.