By the end of 2019, Silvergate Bank, California, will begin issuing loans secured by digital assets to selected institutional clients. This is stated in S1 form , which the parent company Silvergate Capital Corporation filed with the US Securities and Exchange Commission (SEC) in anticipation of the IPO.
So, the bank found a demand for loans for the purchase of cryptocurrencies. The new service assumes that collateral in digital assets (or US dollars) will significantly exceed the amount of the loan.
To do this, Silvergate Bank also uses the Silvergate Exchange Network (SEN), which allows corporate customers to conduct transactions in US dollars at any time. So, the loan will be issued in US dollars, and the collateral in digital assets will be stored on the SEN participating exchange, where it can be instantly sold in case of a margin call.
Note that in the second quarter, the volume of transactions passing through SEN more than doubled – up to $ 8.6 billion.
It is worth adding that Silvergate Bank provided banking services to the bitcoin exchanges Gemini, Paxos, bitFlyer and Kraken in the early stages of their development, despite legal uncertainty.
In February 2018, Barry Silberta Digital Currency Group (DCG) invested in Silvergate Capital Corporation, but the exact amount of investments is unknown.
Recall, at the end of 2018, Silvergate Bank services used 542 associated with the client cryptocurrency.
More information about the state of the cryptocurrency lending market can be found here:
Study: kriptovalyutnogo lending sector has grown to $ 4.7 billion, but the interest rate is below 2% https://t.co/CjD9l8XQF8 # cryptocurrency # study # lending pic.twitter.com/HNqBasdBPC
– BlockchainJournal (@BlockchainJournal) August 16, 2019
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