Silvergate Bank took advantage of several risks and was one of the first banks to allow a Bitcoin company to open a bank account. In a call for investors today at the bank based in La Jolla, California Bank announced it had received $ 586 million in cryptocurrency deposits in the third quarter of 2020.
It brought its total cryptocurrency assets to $2.1 billion as of September 30, 2020, compared to $1.5 billion as of June 30, 2020. Not after the record for the fourth quarter of 2017, when the bank invested $ 835 million in the crypto business, it didn’t hit the highest level.
Banks Warming Up to Cryptocurrencies
The bank is opening a way for other banks to do the same, previously an exclusive domain outside of cryptocurrency start-ups: generate real income by working with blockchain assets.
Even though the banks do not physically hold their assets, 928 customers denominated in digital currency generated $ 3.3 million in revenue for the bank this quarter, compared to $ 2.4 million in Q2 2020 and $ 1.6 million in the third quarter 2020. 2019.
After regulatory changes that allowed banks to hold what are known as stable coins and other crypto assets, as well as many other institutional investors entering the room, the news shows what appears to be growing interest in blockchain-based assets.
In a statement, Alan Lane, CEO of Silvergate, said that the bank infrastructure lays the foundation for Silvergate’s success in a highly digital world. Given the many expansion opportunities, we see quite a few options for further growth.
While other applications are running, a centralized solution is only available to Silvergate customers. However, the bank has plans to create an open-source blockchain version of the platform that anyone can access and use.
Allowing Banks to Provide Blockchain Services
In July, U.S. offices Currency Controller (OCC), the Ministry of Finance branch that controls central banks, issued a notification allowing banks to provide various services for blockchain assets, mostly stable coins, faster. Trading in this traditional currency is cheaper, but it is backed by real assets like the U.S. dollar, making it more durable than bitcoin and most other cryptocurrencies.
In recent months, the $ 10 billion asset management firm Stone Ridge has announced a $ 115 million position in Bitcoin as part of a division primarily dedicated to cryptocurrency custody. Square invested about $ 50 million in Bitcoin, and the Business Intelligence company, MicroStrategy, converted $ 425 million of its assets into Bitcoin.
At least 20 institutional investors have filed with the SEC on their investments in the Grayscale Bitcoin Trust (GBTC). Canadian digital asset manager 3iQ has $ 113 million in its Bitcoin funds, launched and publicly traded in April in Toronto.