The parent company of California’s Silvergate Bank is hitching a future initial public offering to investor interest in cryptocurrency companies.
According to an S-1 filing to the Securities and Exchange Commission by Silvergate Capital, the bank has 483 crypto clients that, combined, have made $1.7 billion in non-interest-bearing deposits as of the third quarter of this year. This is a jump from the 114 clients and $609 million seen in the same period in 2017.
Silvergate said in the filing its primary customers are crypto exchanges, with $793 million in deposits; institutional investors including hedge funds and venture capital funds that invest in crypto assets, with $573 million in deposits; and other firms including new protocol developers and miners, with $227 million in deposits.
It’s not a free toaster that drew those companies. Silvergate said it started mining for digital currency depositors in 2013. “We leverage our technology platform and our management team’s expertise in the digital currency industry to develop, implement and maintain critical financial infrastructure solutions and services for many of the largest U.S. digital currency exchanges and global investors,” it added.
Its proprietary technology platform, called Silvergate Exchange Network, “is a central element of the operations of our digital currency-related customers” and helps the bank attract new customers. That’s because it allows “the efficient movement of U.S. dollars between participating digital currency exchanges and investors.”
Speaking of “efficient movement,” here is what the company said its bank does with those non-interest-bearing deposits that make up “the majority of our funding”: They are invested into interest-earning deposits at other banks and investment securities, as well as into lending opportunities “that provide attractive risk-adjusted returns.”
The parent company is aiming to raise $50 million from its IPO on the New York Stock Exchange under the trading symbol “SI.”