Silvergate Bank, a crypto-friendly lender that saw its assets double after recently focusing mostly on blockchain firms, is pursuing an initial public offering on the New York Stock Exchange (NYSE). The San Diego-based bank filed with the market regulator, the US Securities, and Exchange Commission (SEC), as it plans to raise $50 million.
If successful, this IPO will be a major instance on where the relationship between mainstream capital markets and the newer cryptocurrency world will go ahead. It will also show how small lenders can capitalize on the mania to service cryptocurrency-related businesses as the big banks avoid the sector.
Crypto, a Real Money Maker
In the absence of major institutional attention, Silvergate Bank provided tailored financial services to businesses that are directly or indirectly dealing with cryptocurrency and blockchain related services. Enabling a seamless transition between the crypto and fiat worlds helped the bank to double its assets under management from $978 million to $1.7 billion.
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The filing with the SEC also highlights how the crypto sector has become a real moneymaker for Silvergate. While major banks continue to refrain from processing transactions in cryptocurrency, “the majority of our funding comes from noninterest bearing deposits associated with clients in the digital currency industry,” Silvergate states.
It further read: “As of September 30, 2018, approximately $1.7 billion, or 88.2%, of our total deposits were noninterest-bearing demand accounts.”
By enabling crypto firms to use their banking services, the local three-branch lender has managed to onboard over 483 blockchain-related companies in the past year, including big US exchanges such as Paxos, Gemini, and Kraken.
Silvergate is not the only bank taking the opportunity to capture a share in the emerging market of cryptocurrency-related businesses. Over the last couple of months, a handful of small lenders in Europe were also following suit, even going as far as offering a dedicated banking service for this sector in an attempt to resolve its financial inefficiencies.