For a few bloated 2018 Consensus unexpectedly a lot of attention to a tiny Bank called Silvergate Bank of San Diego. The institution was seen as a lifeline for cryptocurrency exchanges and businesses, which banks on wall street pointed out.
By 2017, small Bank increased its assets more than doubled to $ 1.9 billion In 2014, despite concerns and potential risks associated with money laundering, the Bank began to provide services to the cryptocurrency exchangers. It currently serves more than 250 international customers.
During his 30-year history of Silvergate has opened three branches in southern California. CEO Alan lane explains:
“I put two and two together, and I thought that the exchangers can hurt banking activities in the future, but in the short term, these companies need banks.”
As Warren Buffett once again expressed its disdain for Bitcoin, lane continued to work with cryptocurrency companies. To attract new customers and gaining trust in the Bank Silvergate open 24/7.
Alan lane, CEO of Silvergate
Lane started to read about cryptocurrencies in 2013 and suggested that they really can destroy the whole mechanism of banking as we know it today. He also found that the blockchain technology could theoretically allow people to become themselves banks. Of course, it is not associated with assistance from the mediators, as is happening now.
The potential benefits of Bitcoin prompted lane to invest a certain amount. During their research, lane also found that most companies who are active in crypto-currencies, avoid most banks, the level of wall street. So he found a unique opportunity to Silvergate to benefit from this.
Entrance Silvergate in the cryptocurrency sector took place in 2013, when the industry was at a nascent stage and invisible to many. At the time, lane was invited representatives of cryptocurrency exchanges in your office to understand their needs, requirements and how Silvergate could be useful.
After several rounds of negotiations, Silvergate decided to conduct its business as a state Bank, which necessarily demanded certification in the California state banking Department and the Federal reserve Bank of San Francisco.
They successfully presented their strategy to the two regulators, and licenses were required. Lane explained:
“Open communication with regulators at an early stage turned out to be really fundamental. We cooperate with the authorities, we ask them if they have suggestions and what we can do better.”
Among the major customers include Silvergate exchange Gemini exchange, Paxos, bitFlyer and Kraken.
More than half of the Bank’s shareholders are fully confident in the long term, crypto-currencies and is reported to have invested us $ 114 million in Silvergate. At the macro level, the Bank’s commitment to work with cryptocurrency exchanges are extremely important for the sector digital assets. Moreover, the move is unusual in the industry, Silvergate had no problems with the regulators.
While the majority of banks usually are organizations for the storage of customer assets, Silvergate is a clearing house and facilitates transactions in real time for the cryptocurrency exchangers.
Thus, Silvergate and its corporate clients represent the users who rely on widespread institutional adoption of cryptocurrency.