The California-based company, which provides commercial banking and payments services to many of the top crypto-related firms such as Bitstamp and Coinbase, said in an updated IPO filing it would offer institutional clients loans in fiat currency collateralized with cryptoassets.
This service would be included in its Silvergate Exchange Network – a payment system designed for its crypto exchange clients. The company said in the prospectus update:
Offering lines of credit would improve liquidity within the order book of our exchange clients, enabling additional trading on their platforms, potentially reducing pricing arbitrage across exchanges and improving the stability of digital currencies.
Silvergate said the service would earn it “attractive risk adjusted returns” because even if the price of cryptoassets being held as collateral should fall, it can sell the assets on one of its client exchanges.
The bank has been rapidly expanding its roster of crypto-related clients: when it updated its IPO prospectus on December 31 it had 542 crypto clients, compared with 655 as of June 30.