The voluntary liquidation of Silvergate Bank, a crypto-friendly bank, has caused uproar in the cryptocurrency industry, with many sharing their thoughts on the bank’s woes and the broader impact of its collapse on cryptocurrencies. Some US lawmakers have taken the opportunity to criticize the crypto industry, labeling it a “risky and volatile sector” that “spreads risk throughout the financial system.” Senator Elizabeth Warren called on regulators to “stand up against cryptocurrency risk,” while Senator Sherrod Brown expressed concern that banks engaging with cryptocurrency are putting the financial system at risk.

However, these comments have faced criticism from the community, with some arguing that this is not a crypto issue, but rather a fractional reserve banking issue. Silvergate had far more demand deposits compared to cash on hand, which led to its collapse.

Several companies have used the recent Silvergate announcement to reiterate their ties to the company that are now severed or lacking. Binance CEO Changpeng Zhao assured clients on Twitter that the crypto exchange has no assets stored with Silvergate, while peer exchange Coinbase also assured supporters that the bank did not hold client funds.

Nic Carter, co-founder of venture firm Castle Island and crypto-intelligence firm Coin Metrics, suggested that the government was responsible for “hastening the collapse” of Silvergate by launching investigations and legal attacks against it. He referred to “Operation Choke Point 2.0,” which he says is a sophisticated and widespread crackdown on the cryptocurrency industry. The CEO of financial services firm Lumida, Ram Ahluwalia, took a similar view, arguing that Silvergate faced a run on the bank after a senator’s letter undermined public confidence in the firm. He claimed that “Silvergate was denied due process.”

Some believe that the collapse of Silvergate will not necessarily harm the cryptocurrency industry, but the proposed changes to tax laws could exacerbate the exodus of cryptocurrency companies from the US. Coinbase, which previously accepted payments through Silvergate, announced which would facilitate institutional client cash transactions for its major clients with its other banking partner, Signature Bank. However, Signature Bank announced in December that it intended to reduce its exposure to the cryptocurrency sector by reducing deposits from clients holding digital assets. To further reduce its exposure to cryptocurrencies, Signature Bank imposed a minimum transaction limit of $100,000 on transactions it would process through the SWIFT payment system on behalf of cryptocurrency exchange Binance.