Silvergate Adds 59 Crypto Clients, But Deposits Shrink

| Publish date: 03/20/2019
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Silvergate Bank is known to be one of the few financial institutions in the United States that actively serves digital currency businesses. In its fourth-quarter report, it managed to add at least 59 clients, though its deposits from the industry plummeted to 8 percent.

Adding More Clients

The results were highlighted in an updated IPO prospectus, which has been filed and provided with the Securities and Exchange Commission. It turns out that the bank, which is based in San Diego, covers around 542 clients in the industry. This includes, but not limited to, crypto exchanges, investors in digital assets, and exchanges. Based on the numbers, it reportedly boosted from the previous 483 clients. This was during the time the bank went public last year.

Among the new cryptocurrency clients Silvergate managed to sign in the fourth quarter were two digital currency exchanges, 33 companies in a miscellaneous category, and 24 investors. It is worth noting that the miscellaneous category, in particular, includes blockchain protocol miners, service providers, and developers.

For the very first time in an SEC filing, the aforementioned bank identified some of its clients, with a few of them believed to be not known publicly. In other words, these clients were merely bank customers before. This includes Genesis Trading, a market maker, and investment funds firm Kenetic and Polychain Capital.

Deposits Shrink Significantly

Although the banking institution was successful in growing its crypto clientele pool, the amount of U.S. dollars stored in its accounts reportedly shrunk. Apparently, the decline was so significant it reached a $123 difference in the fourth quarter alone. This is definitely a huge one, especially since September 30 last year saw a figure of $1.593 billion and $1.470 on December 30.

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The decline is believed to have come directly from the exchange category, which covers account balances that plummeted by around $174.4 million from originally was $618.5 million. Interestingly, the two other groups managed to grow in deposits. While crypto investors were able to increase to around $577.5 million from $4.8 million, other balances from startups also grow to $273.9 million from $46.4 million.

Crypto-related firms are not just about making up Silvergate’s main customer base, but they also own at least 13.1 percent of the banking institution’s stock. In fact, its 10 largest clients had obtained $843.6 million of deposits, displaying a 47.3 percent of the total. According to the aforementioned filing, nine of these firms are mainly crypto businesses.

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