Crypto Markets in Crisis: Bybit Halts USD Deposits as Silvergate Reevaluates Going Concern

The US dollar, the world’s most widely used currency in trading markets and cryptocurrency exchange, is facing an unprecedented stress test with the suspension of USD deposits by crypto exchange Bybit and Silvergate’s reevaluation of its “going concern” status. On March 4th, Bybit, the Dubai-based exchange, announced it was temporarily halting US dollar deposits due to service outages from an endpoint processing partner. On top of that, Silvergate, the California-based lender that offers traditional banking services to exchanges, announced last week that it was reviewing its “ability to continue as a going concern” and delayed filing its annual report with the Securities and Exchange Commission.

The combination of Bybit’s halt and Silvergate’s reassessment makes it a big deal for the crypto market. Markus Thielen, head of research and strategy at crypto services provider Matrixport, noted this trend in a client note, writing, “when Binance halted USD transfers in January, Bitcoin prices dropped -10%. Obviously, Binance has a much bigger impact than other exchanges, but ByBit will now halt USD transfers from March 10th, which is preventing SWIFT (international) and Wire transfers (national) to reach some crypto exchanges, making it a BIG deal.”

While Bybit will still offer users the ability to deposit and withdraw crypto currencies to and from wallet addresses and fund purchases through credit cards and other payment methods, it’s the absence of US dollar deposits that is proving to be disruptive. Bybit’s move follows a month after Binance, the largest digital assets exchange by trading volume, which also halted its dollar transfers. Since then, the crypto markets have seen substantial downward pressure on Bitcoin, Ethereum and other major coins.

It appears as though US regulators are trying to combat the crypto markets by cutting off US dollars access to exchanges and other firms. The recent news follows a joint statement issued by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) on January 3rd, which warned banks with crypto exposure to align with “safe and sound banking practices”.

The collapse of investing platform FTX in November of 2022 further served to illustrate the fragility of the market, triggering outflows and increased scrutiny from regulators. This has caused a ripple effect that has impacted Silvergate, Signature Bank, and a handful of other exchanges and lenders. Signature Bank announced it would drastically reduce its crypto deposits in January and followed through by only processing trades over $100,000 USD. Now, Silvergate has gone a step further, terminating its digital assets payment network entirely.

And it doesn’t stop there. Even Bybit, a Dubai-based exchange that doesn’t have exposure to Silvergate and has managed to keep its funds secure, has been forced to suspend its USD payments. Some have speculated if this is part of a larger “Operation Choke Point 2.0” that is targeting high-risk companies like crypto exchanges.

It’s clear that US regulators are attempting to crack down on crypto markets and it’s causing major ripples across the industry. It should be noted that none of the above-mentioned exchanges were hacked or suffered a data breach, and the funds remain secure. For the most part, this is a calculated effort by authorities to scale back their exposure to risk. In the meantime, it just leads to further speculation over what could be the next course of action for the crypto market.

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Kassidy Florette
Kassidy followed her friends to buy her first Bitcoin in 2015, has been participating in various projects since 2019 as a marketing communication lead. Her knowledge and passion brings her in as a contributor.