According to Bank of America, the latest crypto turmoil could hurt Silvergate Capital as investors lose confidence in the bank’s chances of getting a stablecoin approved. Analyst Brandon Berman downgraded the crypto bank’s stock to neutral from long and lowered its price target to $37 from $72. The new target represents a 6.7% rise for the stock, which is down 77% this year. The crypto took a hit on Wednesday — with bitcoin hitting a low not seen since 2020 — after Binance walked away from a deal to acquire rival FTX over “mismanaged client funds and alleged investigations by US agencies.” The deal was previously seen as a way to address a “liquidity crunch” that FTX was facing. “After the 3Q22 results, we asked the question, ‘Is the worst behind them?'” Berman said in a note to clients, referring to the company’s third-quarter earnings release in mid- october. “We were wrong.” The situation is a “black eye in the broader crypto market,” Berman said, which could cause investors to exit the market and temporarily refocus lawmakers on stablecoin legislation, which is a term used. to describe cryptocurrencies. This could delay Silvergate’s pilot launch of its own stablecoin, which has already been pushed back from an expected 2022 launch. Berman said SIlvergate’s stablecoin launch was a key part of his optimism about the stock. He said the new share price target reflected the reduced likelihood of a stablecoin contributing to the company’s expected profitability in 2024. Berman said institutional clients could transfer deposits from FTX to Silvergate or a competitor . He said SIlvergate should not experience any loan losses or forced liquidations as a result of the move or other major events in the crypto world. However, concerns about the delays only escalate as Berman sees competitors progressing and diminishing SIlvergate’s advantage of being first in space. He specifically mentioned Circle Internet Financial, which has been approved by the central bank of Singapore to provide digital payment token products and transfer services. – CNBC’s Michael Bloom contributed to this report.