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Another step forward for the crypto industry. Silvergate Bank is turning up the heat in its latest initial public offering (IPO) update, aimed at scaling the crypto sphere by providing funding to crypto firms – both startups and established companies.
Struggling crypto companies or startups that are looking to expand their services can get a loan from Silvergate Bank on a reasonably favorable interest. Silvergate’s credits product can be funded with either a crypto coin or the most familiar fiat currency, the US dollar.
In a recent amendment to form S-1 that the banking firm submitted to the SEC, Silvergate made it known that there could be attractive opportunities for crypto firms in its soon-to-be launched IPO. Using this crypto borrowing ability to enhance customer relationship and interest income, Silvergate looks forward to helping its clients achieve their goals with a little token.
To enjoy this amazing opportunity, just like in the traditional financial world, the borrower is asked to provide collateral – which could be in form of virtual currencies or the U.S. dollar – that is significantly greater than the loan amount. After which the bank would initiate the process by creating a conservative aggregate lending amount to refine the credit product. And then, it will develop a risk framework to help minimize the risk involved. All of these are geared towards making the lending experience better, easier, and safer.
Using the Firm’s Cryptocurrency SEN
The banking firm also noted that its traditional digital currency, SEN, would be of immense help in this new network. The virtual currency, which has enjoyed a substantial increase since the first quarter of 2019, will serve as the credit currency for the deal. Silvergate believes that employing SEN in its credit product will help to boost the efficiency of the program. It explains:
“For example, an exchange client could hold the digital currency collateral, we could use the SEN to initially fund the loan from our balance sheet, and in the event of a collateral deficiency, we could immediately sell the digital currency collateral through our exchange client and use the SEN to bring the resulting funds back to our balance sheet.”
This, Silvergate surmises, will help to provide “greater capital efficiency for institutional investor clients that wish to transact without needing to move liquidity on and off different exchanges.”
We hope to hear more as soon as the IPO is launched later on this year. Stay glued!