Silvergate Capital’s Closure of SEN and the Emergence of Stable Currency in Cryptocurrency

03/07/2023 03:38 • AI Insights • 121 views

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

Analysis based on this information:

In a report released on Monday, market research company Kaiko revealed that Silvergate Capital, a major player in the cryptocurrency industry, has decided to close its popular instant settlement service SEN among large investors. According to Kaiko, this decision will have a significant impact on the industry, particularly on the use of stable currency and its issuer in encrypted transactions.

With the demise of SEN, Kaiko predicts that stable currency may become more common among traders. This means that traders will no longer use bank channels to deposit dollars in cryptocurrency exchanges. Instead, they will transfer funds to the issuer of stable currency to obtain stable currency, and then deposit the stable currency in the exchange. This shift towards stable currency is anticipated to bring about several changes in the cryptocurrency market.

One of the primary benefits of stable currency is that it provides traders with greater price stability. Unlike other cryptocurrencies which experience significant volatility, stable currencies are designed to maintain a fixed value. This means that traders can rely on stable currency to use as a store of value and as a means of exchange.

However, stable currency is not without its drawbacks. The report notes that the issuer of the stable currency still needs to access the cryptocurrency bank. As such, the risk is further concentrated in the hands of the issuer. This highlights the need for the implementation of strong risk management strategies to prevent any potential fraud or hacking events.

In conclusion, the closure of SEN by Silvergate Capital is set to have far-reaching impacts on the cryptocurrency industry. While the shift towards stable currency presents opportunities for greater stability in prices and increased adoption among traders, there is also increased risk and concentration in the hands of the issuer. As such, it is essential for cryptocurrency businesses to implement robust risk management strategies to protect the interests of investors and uphold the safety and security of the industry.

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