Despite a prevailing bear market for Bitcoin and cryptocurrencies, the number of those interested in the industry grew in 2018. That’s the claim by Silvergate Bank, who touts that it is the “leading provider of innovative financial infrastructure solutions and services to participants in the digital currency industry.”
This is based on information enclosed in its preliminary prospectus which the financial institution filed recently with the Securities and Exchange Commission of the United States.
Crypto Deposits Increase to $1.58 Billion for Silvergate
At the close of 2018, Silvergate showed that 542 crypto-related clients were giving the bank their business. This number was a 122.1 percent increase from the prior year. In addition to client growth, the bank also saw total crypto deposits move up from $1.46 billion to $1.58 billion, an increase of 8 percent.
The bank touts some very notable clients, some of which are top-ranking cryptocurrency exchanges. These include Bitstamp, Genesis, and Circle, who deposited a total of $618.5 million throughout 2018.
Additional clients who turned to Silvergate include some prominent players in the crypto community. For instance, the bank offers its services to Polychain Capital, bitcoin storage company Xapo, Paxos, the firm that supports PAX, and Kenetic Capital, a digital asset trading and investment institution.
Silvergate resides in San Diego, California, and is one of the few financial institutions to welcome crypto businesses with open arms. They join prolific banks who already support crypto, including Signature Bank in the US and Bank Frick which is located in Europe.
The bank has shown that it believes there is a lot of room for growth n the cryptocurrency industry. Especially since Silvergate estimates that the current market for deposits as they relate to digital currencies is in the realm of $30 to $40 billion.
Prospective Silvergate Investor Concerns
Even though the firm itself is very high on cryptocurrency, Silvergate did send out a warning about cryptocurrency to those who are considering investing.
The bank stated:
“Our business is subject to many substantial risks and uncertainties you should consider before deciding to invest in our common stock … including risks that that the digital currency industry may not gain widespread adoption, that legal and regulatory uncertainty regarding the regulation of digital currencies and digital currency activities may inhibit the growth of the digital currency industry, that our low-cost funding strategy may not be sustainable, that our deposits may be adversely affected by price volatility.”
Last November, Silvergate Capital, who is the parent company of Silvergate Bank, started preparing for an Initial Public Offering. In its prospectus, the firm says that it plans to use monies from the IPO to continue to fund its financial operations. Even though the ‘Bitcoin Bank’ says that it’s open to potentially seeking acquisitions in the future, it currently has no plans do to so.