Silvergate Bank For Cryptocurrency Customers Pursues IPO As Bold Move Shows Market Confidence
With Over 480 Crypto Customers, Silvergate Bank Pursues IPO
Cryptocurrency used to be an elite investment opportunity, starting with a successful platform that already sells tokens. However, as the industry has gravitated more towards mainstream use, banks have begun to get involved as well. In a recent announcement from Silvergate Capital Corporation, a new IPO is coming up to broaden their services to digital currency customers.
Silvergate Capital Corporation is the holding company of Silvergate Bank, which consistently supportive of various startups. The corporation recently filed an S-1, hoping to launch an IPO with Barclays Capital Inc and Keefe, Bruyette & Woods as underwriters. Chief executive Alan Lane has consistently voiced the company’s support of customers tied in with cryptocurrency.
Many firms that deal with crypto are deemed high-risk by financial institutions, according to a report from The Block. Still, Silvergate has managed to support many crypto platforms and tokens as startups, including big names like Gemini, Paxos, BitFlyer, and Kraken, even though these platforms were rejected by other banks. They have even supported blockchain analysis businesses and established their own platform called the Silvergate Exchange network, which makes it easy to move funds between accounts.
The financial information included with the S-1 goes as late as September 30th of this year. In the S-1, they include multiple factors that impact their decision to launch an ICO, focusing highly on the varied customers they already help, like miners, exchanges, and custodians.
The S-1 notes that the company is the holder of $1.7 billion in “non-interest-bearing deposits,” showing a year-over-year increase of 180.7%. The costs of these deposits and funds were less than 1% each, which allowed them to be involved with commercial real estate lending, mortgage warehouse lending, and other lending opportunities. The low costs had a lot to do with the increased digital currency customers, bringing in $14.3 million in profit for the year so far, based on data from January 1st to September 30th.
Presently, crypto investors hold a significant portion of Silvergate’s stock at 13.1%, and it seems that Silvergate is looking to make them more prominent in their firm. This month alone, they already agreed to sell both a small business lending division and a retail branch, with each bringing in well over $100 million.
Silvergate believes that their future expansion will be rooted in fiat-backed stablecoins, as they respond to the demands of examining crypto-business offerings. They also plan to collaborate with a banking partner internationally to make their effect more widespread.