Silvergate, the bank of crypto currency exchanges files for an IPO as it tightens its already strong ties to the investment space.
San Diego based Silvergate Capital, the parent company of the Silvergate Bank, is looking to list as an initial public offering (IPO), and have filed the necessary documentation with the Securities Exchange Commission. Finally good news for investors after BAKKT announced that its daily bitcoin futures platform would be delayed until next year. Hundreds of cryptocurrency-related companies bank with Silvergate inlcuding the popular exchanges Kraken and Gemini.
Silvergate has disclosed that it has 483 clients in the blockchain space and is pursuing a strategy to become “the banking platform for innovators”. The bank has seen a significant growth in clients from last year, considering that the firm only had 114 clients in September of last year.
CEO Alan Lane, is bullish on crypto in general and has made it clear he believes blockchain technology could disrupt traditional financial services. In the mean time he’s seen an opportunity, stating:
I put two and two together, and I thought, well, it might disrupt banking long-term but in the short-term these companies need banks… they’re not doing anything illegal or immoral. If they were we wouldn’t be banking them.
He made the realization quite early on, in 2013, allowing the bank to take the opportunity to invest in new cryptocurrency exchanges that would grow tremendously over the years. It also managed to weather the 2008 global economy crisis much better than most, considering that it had stopped its mortgage operations three years earlier.
Silvergate has invited many cryptocurrency exchanges in to its offices to discuss issues and obstacles with regards to cryptocurrency regulation when many banks and financial institutions like Visa are still hesitant to involve themselves further in cryptocurrency sector.
Lane credits the fact that he began an early dialogue with regulators as one of the reasons for his company’s massive success:
“That open communications with the regulators early on has proven to be really foundational. We’re very collaborative with the regulators, we ask them if they have suggestions, and what we can do better.”
Another advantage of the company is the fact that it has actually established a network of cryptocurrency clients that has allowed for real-time transactions called the Silvergate Exchange Network, and Lane claims that through word of mouth alone, the customer base has grown tremendously.
Travis Scher of Digital Currency Group points out that where many were wary of dealing with cryptocurrency companies, Silvergate saw an opportunity. He states:
“One of the ways that the government has tried to make digital currency exchanges harder to operate is to cut off their banking relationships… it hasn’t always been easy for them to secure a banking [relationship].”
Source: Business Insider
Scher certainly has quite the insight into the cryptocurrency market in general, considering that Digital Currency Group was an early investor in Coinbase and Ripple, widely considered two of the most important companies in the cryptocurrency space. It was also recently reported that Coinbase was raising money at a staggering $8 billion valuation, when it was valued at less than $2 billion a year before that.
Silvergate’s most important clients are cryptocurrency exchanges, that are responsible for $793 million in deposits. The bank’s other clients consist of cryptocurrency-focused institutional investors, and other companies including cryptocurrency mining firms and protocol developers, as well. It boasts over $1.7 billion in deposits. The bank serves some of the most well-known companies in the cryptocurrency space, such as Gemini, Paxos, and Kraken.
The company filed an S-1 and hopes to launch the IPO with globally-respected underwriters such as Barclays Capital Inc, Keefe, and Bruyette & Woods.