Silvergate Capital Corporation, the parent company of SilverGate Bank, has revealed its connections with the cryptocurrency industry. The information was disclosed as part of the California-based company’s initial public offering (IPO) filing with the U.S. Securities and Exchange Commission (SEC) as mandated under the law.
Growing number of crypto clients
Owing to the numerous number of startups looking to bank with Silvergate, the bank touts itself as ‘The Banking Platform for Innovators’ in its prospectus, filed with the SEC on Nov. 16. In its filing, Silvergate Capital Corporation disclosed that the bank now provides banking services to 483 cryptocurrency ventures, with a combined $1.7 billion in non-interest-bearing deposits, according to the bank’s financial Q3 2018 report. The number represents an increase of 323% from the 114 companies reported in Sept. 2017.
The bank provides services for a wide array of cryptocurrency services to ventures engaged in the industry. Its primary customers are crypto exchanges, with $793 million in deposits. It also serves institutional investors like hedge funds and VC funds, with the focal point being the crypto assets they manage. This category of institutional investors has brought on board business valued at $573 million in deposits alone. Other crypto firms benefitting from Silvergate’s banking services are new protocol developers and cryptocurrency mining firms. This last category of startups have $227 million in deposits with the bank.
Explaining the numerous funding streaming in from cryptocurrency firms, Silvergate Corporation said, “The majority of our funding comes from noninterest bearing deposits associated with clients in the digital currency industry.” The statement termed it as a “unique source of funding,” which offered an advantage over traditional financial institutions. Those deposits are invested into interest-earning deposits at other banks and investment securities, as well as into lending opportunities “that provide attractive risk-adjusted returns,” it says.
Silvergate Exchange Network (SEN) and its IPO
Capitalizing on its relationship with the crypto sector, Silvergate Corporation launched its own network of digital currency exchanges and investors. It developed its own crypto infrastructure in 2017, called the Silvergate Exchange Network (SEN). SEN aims to allow the efficient movement of U.S. dollars between participating digital currency exchanges and investors around the clock. SEN will file for an IPO in which it will be seeking to raise $50 million and a listing on the New York Stock Exchange.
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