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Turns out the “no inflation” meme may not be here to stay.

Silvergate continued to see growth in Q4 of 2020, and CEO Alan Lane is looking to capitalize on it in 2021 with plans to monetize the bitcoin bank’s payments platform.

Silvergate plans to build on its strong Q4 results by further exploring lending and custody opportunities related to its payments network — and has kicked of 2021 with a $200 million follow-on public offering to bolster its growth efforts.

The close of 2020 showed Silvergate kept its trending momentum, finishing out the year with considerable gains compared to 2019. The bank doubled its net income compared to Q4 2019, seeing an increase from $3.6 million at $0.19 per diluted share to $9.1 million at $0.47 per diluted share.

Still, total 2020 net income only slightly outperformed the previous year. It closed 2019 with a net income of $24.8 million, while 2020’s net income was $26 million.

Noninterest bearing deposits saw an increase, which Silvergate attributed to crypto exchange deposits and institutional investments. Seventy-six exchanges accounted for 47.2% of the total deposits as of 2020, which reached $3.7 billion. That’s an $800,000 increase from 2019, when 29.1% of total deposits were held by 60 exchanges. 

Digital currency customer fee income jumped significantly in 2020, reaching $11.1 million compared to 2019’s $4.9 million.

The Silvergate Exchange Network (SEN), the bank’s payments network, continues to be the backbone of the company, according to Lane. Transactions in Q4 reached over $59 billion in volume — a 62% increase from the previous quarter. 

“Looking ahead to 2021, I am extremely excited about the multiple paths to continued growth and opportunities to monetize the SEN platform, such as digital asset lending and custodial services,” said Lane.

This likely means further building out SEN Leverage, the bank’s lending product. Silvergate launched a pilot in 2020 and has since become a “core product,” according to Lane. The product allows customers to receive dollar loans collateralized by bitcoin.

“We anticipate increased demand for this offering over the next year,” said Lane.

In addition to its plans for lending, the bank will launch a follow-on public offering of Class A shares, according to a new announcement. The bank filed an S-3 with the Securities and Exchange Commission (SEC) today which permits the public offering of $200 million of shares.

The net proceeds will go to keeping Silvergate’s capital at a compliant level and support growth “organically or through strategic acquisitions. Net proceeds also may support the SEN Leverage lending product or other services. 

Silvergate’s earnings were originally scheduled for Jan. 25 before the firm decided to push the announcement forward. Now, the accompanying earnings call will take place on Jan. 21 at 8:00AM EST. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Bitcoin fell by over $3,300 while options traders see ether going higher.

Tron USDT volume eclipses Ethereum for the third consecutive week.

Bitcoin’s bull run peak of nearly $40,000 caught the attention of many institutional investors — but Barclays Private Bank chief market strategist Gerald Moser doesn’t seem impressed. 

“While it is nigh on impossible to forecast an expected return for bitcoin, its volatility makes the asset almost ‘uninvestable’ from a portfolio perspective,” Moser told Financial News. 

Moser adds that the volatility seen in bitcoin mimics the behavior of other risk assets like oil. “Many would probably throw the cryptocurrency out of any portfolio in a typical mean-variance optimization.”

“The performance of the cryptocurrency has been mostly driven by retail investors joining a seemingly unsustainable rally rather than institutional money investing on a long-term basis,” Moser said.

Barclays, a large-scale financial service firm in the U.K., had previously shown interest in cryptocurrency and digital asset technology. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The adult entertainment website now accepts payment in 16 cryptocurrencies.

As a new administration is sworn in, how will one if its most important officials – nominated Treasury Secretary Janet Yellen – impact the digital assets space?

A new court filing indicates that the New York Attorney General has received much of the information it has sought from iFinex, the parent company of stablecoin issuer Tether and crypto exchange Bitfinex.

The letter, penned by Steptoe partner Charles Michael, explains:

“The Respondents have largely completed the document production and have produced a substantial volume material to the Office of the Attorney General (“OAG”) in the past few weeks, although there remain supplemental agreed-upon items that need to be completed. The parties will need a few more weeks (i) to produce the supplemental information, (ii) for OAG to review the production, and (iii) to discuss further among themselves what if any further proceedings may be necessary.”

The document production is part of the longstanding case between the two which began in April of 2019. At that time the NYAG alleged that iFinex had co-mingled funds between its offshoots Bitfinex and Tether to cover up an $850 million loss for Bitfinex. 

During the course of 2020, the NYAG sought to compel iFinex to produce documents related to its investigation. Bitfinex and Tether repeatedly disagreed during the court proceedings, citing jurisdictional issues among other arguments to avoid producing the documents.

However, the NYAG won the ruling and iFinex later lost its appeal on the decision in July. iFinex later failed to produce the documents during the court-appointed, 60-day window, leading to further proceedings.

 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The sell-off also led to major corrections for other cryptocurrencies including ether, stellar, xrp and chainlink.

Bitcoiners are looking for persistent USD inflation to validate their favorite asset. That’s unlikely to happen soon, economists say, but low interest rates are still a boon for BTC.