The shares of digital asset bank Silvergate Capital have risen over 120% since January and nearly 1,300% since going public in November 2019, as CNN reported on Monday. Unlike most U.S. banks, Silvergate Capital has been focused primarily on providing cryptocurrency-specific services, which seems to have paid off.
Although Silvergate's shares have dropped from over $170 to around $130 at press time during the last couple of days, coinciding with the recent Bitcoin price correction, it still boasts almost 1,000% growth since late 2019.
Silvergate's services offering spans from payment processing over cryptocurrency deposit accounts to Bitcoin-backed loans to companies operating in the space. The bank’s CEO Alan Lane explained that a major difference between his institution and traditional banks is its non-stop operation:
We started with crypto deposit accounts for customers and quickly learned that companies need more help beyond traditional 40-hours-a-week banking. [...] We needed to build a bank for a 24/7 digital world.
Per the report, the bank holds about $5 billion of deposits backed by Bitcoin and other digital assets. Silvergate's most appreciated service, called Silvergate Exchange Network (SEN), allows its customers to instantly transfer fiat currencies between cryptocurrency exchanges, which is presumably particularly important when looking for the best prices. According to Lane, this service constitutes a significant improvement over traditional finance:
There is a lot of friction in banking. Wire transfers can be time consuming. [...] The beauty of SEN is that once a deposit account is open, you can transact with others in [...] seamless method and transfers are instant.
Silvergate Capital primarily serves institutional investors or crypto asset companies, including Coinbase and Square.