The holding firm of crypto-friendly Silvergate Bank, Silver Capital Corporation recently announced that the company intends to provide loans to crypto companies.
The Silvergate Bank filed an S1/A form on August 15th with the United State Securities and Exchange Commission. In the filing, the company mentions that there could be excellent opportunities to offer virtual currency-based borrowing services to strengthen our high-quality user relationship and further boost our interest income.
Some of the foremost crypto startup firms functioning within the crypto market such as Paxos, Gemini, Kraken, and bitFlyer had aggressive profiling, and despite this Silvergate Bank-supported them.
In the updated filing, the company addressed that due to high demand from its users and potential clients seeking to borrow money so as to purchase cryptocurrencies, the company is actively working on a credits-based product. The new product is expected to launch in the ‘latter part of 2019.’
As per Silvergate firm, the product model could consist of the customer offering digital currencies or US dollars as collateral in an amount widely higher than the credit line.
The bank could later
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.
Silvergate highlights that the proprietary payments system of Silvergate, SEN developed for the cryptocurrency industry, could play a significantly wider role in the new credits product of Silvergate. For instance, an exchange client could hold a cryptocurrency collateral, Silvergate could use SEN network to initially fund loan from the company’s balance sheet and in case of collateral limitation, the company could instantly sell the virtual currency collateral via its exchange customer and use the SEN network to obtain the money-back into their balance sheet.
Further, the company outlined that the credit services and SEN together will offer
greater capital efficiency for institutional investor clients that wish to transact without needing to move liquidity on and off different exchanges.
Silvergate also revealed that the firm discovered huge desire from its customers for the bank to involve into custody and exchange of virtual currencies among users.
According to Owler- largest internet company of the US projected that the annual revenue of Silvergate Bank could be around $30 million.
Back in 2018, Silvergate Bank’s deposit resulting from digital currency grew by $150.4 million.
The recently updated filing also mentions that payments through its SEN have increased by two-fold. In the first quarter of 2019, payment accounted to $4.1 billion and in the second quarter of 2019, accounting to $8.6 billion.