Institutional investors will soon be able to obtain bitcoin home loans denominated in US dollars through Silvergate Capital Corporation, the holding company of the cryptocurrency supporter Silvergate Bank.
According to Silvergate announcement, Coinbase Custody will be custodian of loans funded through the bank’s Silvergate exchange network (SEN). The network will provide access to capital through secured bitcoin loans, while Coinbase stores the cryptocurrency in cold storage.
“There aren’t usually traditional lending services in the cryptocurrency industry, which means there aren’t many lenders to choose from for investors,” said John Milton, director of digital asset lending at Silvergate. “Our relationship with Coinbase Custody gives institutional investors greater access to capital efficiency so that they can take advantage of market opportunities in the cryptocurrency industry.”
Silvergate will offer loans of $ 5 million with original maturity of 12 months. The company’s announcement came as the company behind the cryptocurrency wallet and exchange app Abra said it would launch a service for cryptocurrency users to receive money from their property without selling, called Abra Borrow. These loans could augment or replace traditional rounds of financing for companies looking to enter the crypto space.
Silvergate has more than tripled its annual revenue from $ 30 million to $ 91.5 million since the first announcement that the company would consider proposals to support cryptocurrency in 2019. At the time, the bank said customers were showing a keen interest in Silvergate ‘participating in the custody and transfer of assets Digital among clients. ”
In the fourth quarter of 2020, CEO Alan Lynn said the bank expects an “increase in demand” for these loans in 2021. Although digital currency deposits increased by $ 2.9 billion over the same period, the price of Silvergate Capital Corporation – The stock was volatile in the first quarter of 2021 and peaked at $ 176.27 on February 16, but was down 40% in three weeks. At time of publication, NYSE: SI is $ 148.90.