Silvergate Bank Adds 48 Crypto Clients in Q4 Even as Deposits Slip 4%

Silvergate Financial institution, one of many few U.S. banks brazenly serving crypto-related companies, added extra crypto purchasers within the fourth quarter of 2019 however noticed deposits and charge earnings from these purchasers drop.

The La Jolla, Calif.-based financial institution, which went public on the New York Inventory Trade below the buying and selling image SI in November, launched its earnings report earlier than the market open on Wednesday.

The report lists a Four % lower in deposits from the crypto business regardless of the addition of 48 crypto purchasers. The industrial financial institution’s general deposits decreased by 1.eight % in the identical quarter (Silvergate additionally serves non-crypto companies).

In a press launch, CEO Alan Lane attributed these new purchasers to the expansion of the Silvergate Trade Community (SEN), which permits industrial prospects to immediately transfer U.S. {dollars} between completely different crypto exchanges. SEN transactions topped 14,400 within the fourth quarter, a 17 % enhance from Q3 2019.

The price of deposits for the financial institution, which holds $2.1 billion in belongings, elevated from 0.5 % to 0.84 %. The financial institution earned $1.Four million in charge earnings from its crypto prospects, down 12.5 % from $1.6 million final quarter.

The financial institution added 11 digital foreign money exchanges (together with over-the-counter buying and selling desks), 21 institutional traders and 16 crypto companies (i.e. mining operations or crypto software firms). 

Silvergate’s internet earnings decreased by round 45 %, from $6.6 million within the third quarter to $3.6 million.

In 2013, Silvergate pivoted from conventional industrial banking to serving the cryptocurrency neighborhood as a wealthy useful resource of non-interest bearing deposits. The financial institution then converts these deposits into interest-bearing deposits at different banks, funding securities and loans. 

Earlier this month, Silvergate launched the SEN Leverage product, which permits proprietary merchants to place up bitcoin as collateral for fiat loans that they will then use to purchase extra bitcoin, just like margin lending within the conventional markets. 

Silvergate additionally made its first rent instantly from the crypto business, bringing on former Blockstream exec Benjamin Richman as director of digital foreign money.

This can be a growing story and will probably be up to date over the course of the day.