296 Interactions, 2 today
“Traditional lending platforms do not usually exist in the digital currency market, which means there aren’t many lenders for borrowers to choose from,” Jon Melton said.
Silvergate Capital Corporation, the parent company of pro-crypto institution Silvergate Bank, will shortly be able to sell Bitcoin-collateralized US dollar loans to retail investors.
Coinbase Custody will be the custodian for loans financed by Silvergate’s Silvergate Exchange Network, or SEN, according to a statement from the bank. The network will provide capital access through US dollar loans collateralized by Bitcoin (BTC), while Coinbase will store the cryptocurrency in cold storage.
“Traditional lending services generally do not exist in the digital currency industry, which means there aren’t many lenders for investors to choose from,” said Jon Melton, Silvergate director of digital asset lending. “Our relationship with Coinbase Custody offers institutional investors increased access to capital efficiency so they can take advantage of market opportunities in the digital currency industry.”
Silvergate will have loans beginning at $5 million with a 12-month limit. The news comes when Abra, the company behind the crypto and fiat wallet and swap software, announced the introduction of Abra Borrow, a programme for crypto consumers to get cash from their holdings without sale. For companies seeking to join the crypto space, such loans may complement or replace conventional financing rounds.
Since revealing in 2019 that it will examine providing crypto-collateralized loans, Silvergate’s annual revenue has more than tripled, from $30 million to $91.5 million. At the time, the bank said that its clients were eager for Silvergate to “be interested in the care and distribution of digital assets between customers.”
CEO Alan Lane said in the fourth quarter of 2020 that the bank expects “increased demand” for these loans in 2021. Despite an increase of $2.9 billion in digital currency deposits over the same time span, the price of Silvergate Capital Corporation stock has been unpredictable in the first quarter of 2021, hitting an all-time peak of $176.27 on Feb. 16 then dropping 40% within three weeks. NYSE:SI is worth $148.90 at the time of publishing.