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Figures for the end of 2018 show that San Diego-based Silvergate Bank saw an upsurge in digital currency customers. Previously, the institution provided banking services for 244 crypto businesses. However, by the end of last year, this figure more than doubled to 542.
About Silvergate Bank
Founded in 1988 as a state-chartered bank, the operations at Silvergate typified that of any other bank. But in recognition of the burgeoning digital currency sector, in 2013 they began actively pursuing digital currency customers.
This move signaled a diversification of strategy in deploying digital assets on deposit across traditional operations, including lending for commercial real estate, mortgage warehouse, correspondent, and commercial business.
The position of Silvergate Bank was considered to be somewhat surprising, given the perceived hostility towards crypto by the global banking sector. Nonetheless, their website reveals an understanding that they see crypto as the future of money. They go on to say:
“We leverage our technology platform and our management team’s expertise to develop solutions for many of the largest U.S. digital currency exchanges and investors around the globe. Our solutions are built on our deep-rooted commitment and proprietary approach to regulatory compliance.”
Misplaced Tribalism
Acceptance of digital currency by traditional financial institutions is a trend that is estimated to continue to grow. With this in mind, Silvergate’s development of infrastructure, to combine the old world with the new, will play a pivotal part in mainstream adoption and acceptance of crypto assets.
As things stand, advocates of crypto generally hold the view that crypto represents the solution to an elitist banking system. And so promote tribalist attitudes against the banking sector. However, in truth, crypto has a symbiotic relationship with fiat. With fiat being the more influential of the pair. For now at least. By actively pursuing crypto companies, banks such as Silvergate, and Bank Frick in Europe, will stand to benefit from the inevitable growth of crypto. Silvergate’s SEC Registration Statement echoes this view:
“We believe that the market opportunity for digital currencies, the need for infrastructure solutions and services and the regulatory complexity have all expanded significantly since 2013. Our ability to address these market dynamics over the past five years has provided us with a first-mover advantage within the digital currency industry that is the cornerstone of our leadership position today.”
Building Out Crypto Infrastructure
The increase in digital asset customers for Silvergate is an encouraging sign for the US crypto market. This news, first reported by The Block, is further heightened when coupled with data that shows customer deposits had increased from $46.4m to $273.9m.
Bear markets are for builders. The calm, the quiet, the disillusionment… while the fickle and fair-weather peer around with nervous insecurity, the builders become the market's foundation, preparing the mortar and stone of tomorrow's towers. #bitcoin
— Erik Voorhees (@ErikVoorhees) September 17, 2018
So, despite the gloom and doom that has dominated headlines of late, we should remind ourselves that the bear market cannot last forever. After all, those behind the scenes are working diligently to develop strong foundations that will sustain better times. Shapeshift CEO, Erik Voorhees sees bear markets as necessary for shaking out weak players. With them gone, crypto businesses can focus on developing quality products and service.
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