Silvergate Bank, a crypto-friendly lender that counts major crypto exchanges like Coinbase and Kraken as clients, is expanding its SEN Leverage service. The product, which was first launched in 2017, allows the bank’s customers to obtain US dollar loans collateralized by their bitcoin holdings at some crypto exchanges that Silvergate is currently serving.
Leveraged trading allows traders to borrow funds in order to juice up their bets, but since it also comes with substantial risks of money loss, many exchanges prefer not to allow amateur traders engage in margined trades.
Silvergate is now expanding access to SEN Leverage by partnering with the digital asset custodian Anchorage, which recently raised $40 million in a Visa co-led series B fundraising.
Anchorage’s custody offering provides digital asset security without cold storage because of its limitations, such as vulnerabilities to human error, theft, and inaccessibility. As such, the company claims that it solves a major industry problem as cold storage also renders the asset illiquid to an extent as it becomes inaccessible and slow to move.
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“Many in our network of over 500 institutional investor customers have asked us to help create greater capital efficiency and we are excited to be working closely with Anchorage to offer this solution for them,” commented Silvergate CEO Alan Lane.
SEN Network handled transfers worth $17.4 billion in Q1
SEN Leverage uses Silvergate Exchange Network (SEN) to fund loans and process repayments in real-time 24 hours per day, 7 days per week.
Silvergate, which is trading under the ticker (NYSE: $SI), registered a first quarter increase in number of transactions handled by its SEN Network, which rose to 31,405 compared to 14,400 transactions in the previous quarter. This figure is also four times higher than the 7,097 transactions set back in the first quarter of 2019.
In terms of value, the global payments platform, which now supports cash purchases of cryptocurrencies through wire transfers, experienced growth in excess of 90 percent thanks to higher volumes of bitcoin trades. Specifically, the SEN handled $17.4 billion of U.S. dollar transfers in the first quarter, compared to $9.6 billion in the fourth quarter of 2019, and $4.1 billion in the first quarter of 2019.
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.