Silvergate Bank Saw Decline in Crypto Exchange Deposits in Q4 2018

Silvergate Bank, a crypto-friendly lender, recently revealed that it witnessed a significant decline in crypto Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term deposits in the fourth quarter of 2018.

As seen on the recent initial public offering (IPO) filing with the Securities and Exchange Commission (SEC), account deposits by crypto exchanges went down from $792.9 million to $618.5 million - a decrease of $174.4 million in three months.

Crypto-Friendly Lender

However, the filing also showed that the crypto-friendly lender had added 59 cryptocurrency-related clients in the same period.

As per the IPO filing, the San Diego-based bank had 542 clients from the cryptocurrency industry, including exchanges, miners, custodians, and global investors, as of December 31st, 2018. In a previous filing, the bank revealed that it had 483 crypto-related clients as of September 30th - the number increased by 59 in three months.

The American bank also detailed that among the newly onboarded clients, 2 are digital asset exchanges, 24 are investors, and the rest 33 falls under the miscellaneous category that includes Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term protocol developers, miners, and service providers.

Moreover, the recent filing also showed that, by the end of last year, another 232 potential crypto clients were in different stages of the bank’s onboarding process.

“Currently, there are over 300 institutional investment funds with aggregate estimated assets under management of between approximately $7.5 billion to $10 billion. Over $8.3 billion has been invested in digital currency-related projects, excluding initial coin offering funding, since December 31, 2013,” Silvergate noted in the filing.

“Approximately $1.3 billion in venture funding was raised in the digital currency and blockchain market in the 12 months ended June 30, 2018, which is the most recent date such information is available.”

Declining Deposits by Crypto Businesses

Though the bank had witnessed an impressive influx of crypto businesses seeking banking services, the total held deposits by its customers decreased by $123 million in Q4 2018 - its went down from $1.593 billion on September 30 to $1.470 billion on December 30.

The largest group responsible for the declining deposits is crypto exchanges. However, deposits from the other two groups - investors and miscellaneous - grew from $572.7 million to $577.5 million and from $227.5 million to $273.9 million respectively.

Earlier this month, a Bloomberg report revealed that crypto businesses around the world are struggling to get basic banking services as major lenders are getting hostile towards the sector for regulatory uncertainties. In such a situation, Silvergate, which its crypto-focused banking services, might stand out as an oasis in the desert.