In an S1/A form submitted with the US Securities and Exchange Commission, the bank has stated as follows: “We believe there may be attractive opportunities to provide digital currency borrowing facilities to deepen our high quality customer relationships and further enhance our interest income.”
The bank, in its press release, has stated that the decision was made after considering the rising demand for cryptocurrency based borrowing. To avail the facility, user should provide the cryptocurrencies as collateral in order to receive significant amount as credit.
The financial institution would then “set a conservative aggregate lending amount to refine the product, and will develop a risk framework to minimize risk and further develop lending models over time.”
The bank revealed that it expects to provide the crypto based credit offering to institutional clients by the end of 2019. Silvergate also opined that there is a considerable interest from clients “to be involved in the custody and transfer of digital assets between customers.”
Owler has estimated annual revenue of Silvergate Bank to be roughly $30 million.
Back in March, Silvergate Bank enrolled several clients dealing in cryptocurrencies. That included crypto exchanges, custodians, miners and global investors, among others in 4Q18.
Last year, Silvergate’s deposits increased 11.4% or $150.40 million.