In a recent research report, Morgan Stanley states digital asset inflows would suffer if efficient fiat and cryptocurrency onramps are absent. After a voluntary liquidation announcement by the Silvergate Bank, the actions of Signature Bank and Binance would take the center stage, per the said report.
In the research report released on Wednesday, Morgan Stanley (MS) reveals the U.S. regulators are bracing to initiate legal actions against banks serving crypto firms. The report goes on to state that Silvergate’ decision to initiate a voluntary liquidation owing to industry and regulatory issues tends to close a prominent fiat-to-crypto on-ramp service in the U.S.
Other crypto-fiat onramp avenues might also be in trouble soon given the unfavorable regulations, the report states. Morgan Stanley flags a possibility of a “coordinated action” by regulators to bring to the center of policy discussions the risks that American banks stand to suffer via crypto services.
A recent statement by the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) also warns banks to stay mindful of the liquidity risks posed by cryptocurrencies.
Analysts Sheena Shah and Kinji C. Steimetz state,
Flows into the crypto sector will slow without the ability to provide on ramps between the fiat and crypto.
Per the analysts, Silvergate stood at the “centre of the growth of the crypto industry, as a U.S. registered bank providing crypto services to crypto exchanges.” Silvergate’s shares fell 58% on March 2 after it announced an evaluation of its capacity to keep operating “as a going concern.” Added to this instance was also an ongoing investigation into it by regulators, Congressional inquiries, and the U.S. Department of Justice.
