On Thursday, August 15, Silvergate Bank supposedly posted a revised S-1/A, in which the bank disclosed that it will be offering shared of its Class A common stock reports The Block Crypto. In this same update, the bank disclosed that it sees new opportunities in which those seeking crypto loans might be served to “further enhance [their] interest income.”
According to Silvergate, the reason for possibly delivering a “credits product”, which is set for launch towards the end of the year, stems from the demand expressed among those seeking to invest in cryptocurrencies. This demand is trusted to be satisfied through the bank’s credit underwriting.
When this service is launched, users will be required to either give in digital currency or USD as a collateral “in an amount significantly greater than the line of credit.” Following this, the bank would “set a conservative aggregate lending amount to refine the product,” adding that a strategic plan to rid damages that may arise from risk will be developed over the course of time.
That said, the network to make this endeavor possible has been described as Silvergate’s SEN, which is deemed essential for not only the credits product but also in establishing meaningful relationships with clients – both of which are expected to generate revenue. In particular, SEN would work hand-in-hand with one of the exchange clients to implement the suggested solution.
“An exchange client could hold the digital currency collateral, we could use the SEN to initially fund the loan from our balance sheet, and in the event of a collateral deficiency, we could immediately sell the digital currency collateral through our exchange client and use the SEN to bring the resulting funds back to our balance sheet.”
Some of the benefits that are likely to surface from delivering the credits product, as disclosed by the bank, include capital efficiency, saving time that comes from having to move liquidity, increase in volumes within client’s operations and trading, as well as possibly reducing