The La Jolla, Calif., creditor, made itself a name by offering difficult-to-come by American dollar banking services to cryptocurrency companies. However, Silvergate now wants to manage its digital assets.
Although the bank does not have these facilities yet, it has obtained a Trust License for New York to grant custody and crypto-settlement. Silvergate’s CEO Alan pointed out, “Settlement services can be in provision for their bitcoin businesses.
Silvergate is, in this case, an agent to ensure that the two parties on the Silvergate Exchange Network (SEN), a payments network that helps corporate customers to transfer U.S. dollars quickly through their crypto exchanges, are compensated for by fiat-for-bitcoin.
“We need to be able to touch digital assets on our own to be that trustworthy broker,” Lane said. And think about it as if Silvergate can also use cryptocurrency. “The program, which almost definitely is the first of its sort provided by a U.S. commercial bank, would be non-recurring for retail investors or institutional investors that are already confident with us.
“Those are customers who aren’t ready to be in the business, and partly the reason for this is that they don’t exist,” Lane said, adding that the bank still doesn’t have a solution in sight to solve the issue. “Our existing customers have already come up with a way to comfort themselves, but they inform us that there are others who do not have a reliable way of settling for themselves.” Upon Silvergate’s first conference call as a public company, Lane told CoinDesk Thursday. Earlier this day, four-quarter results were released, including a 6% rise in crypto customers and a 4% decline in deposits.
Silvergate Bank 2020 will include workers who will effectively invest Bitcoin’s margin in addressing specific challenges in the digital asset sector, Lane added. It will also solve the problems of the bank’s financial markets.
Wage spending increased by almost 6 percent in the fourth quarter from a year before to $8.7 million. Lane stated when asked what proportion of the expenses was in respect to compliance costs, that the majority of this was for client service and software developers.
Silvergate utilizes Chainalysis as well as Elliptic, Lane said. It spends funds on compliance, of course. Such vendors evaluate the government blockchains in which banks have the task to monitor under regulations to identify unusual activity.
The act of making public Silvergate has created a better gateway for the crypto business to join the bank’s agency. Silvergate also positions itself to raise capital more quickly if appropriate.
Silvergate presently has a 10.5% leverage ratio, indicating that the banking institutions require more than double the amount of capital available (5%).
“We could increase twice the bank size alone on this measure and not deplete capital,” said Lane. “It’s just a measure, and I’m not saying we would… but we aim to raise additional funds if we could see the leverage ratio dropping to 8percent.”