Silvergate Expands Reach of Bitcoin Collateralized U.S. Dollar Loans, Announces Fidelity Digital Assets as Custody Provider

Rhea-AI Summary

Silvergate Capital Corporation (NYSE: SI) has selected Fidelity Digital Assets as a custodian for its SEN Leverage product, which allows institutional investors to access USD loans collateralized by bitcoin. This collaboration simplifies access to capital for clients who already use Fidelity for custody. The loan volume for SEN Leverage surged from $35.5MM in Q3 2020 to $82.5MM by Q4 2020. Silvergate's lending authority and Fidelity's secure custody are expected to enhance investor experience by maximizing capital efficiency and integrating their services.

Positive

• Collaboration with Fidelity Digital Assets enhances investor access to capital.
• SEN Leverage loan volume increased from $35.5MM in Q3 2020 to $82.5MM in Q4 2020.

Negative

• None.

Silvergate Capital Corporation (“Silvergate” or the “Company”) (NYSE: SI), the leading provider of innovative financial infrastructure solutions to the digital currency industry, today announced Fidelity Digital Assets, a leading institutional focused execution and custody services platform provider, as a custodian for SEN Leverage. SEN Leverage provides secure, institutional-grade access to capital through U.S. dollar (“USD”) loans collateralized by bitcoin.

Using SEN Leverage, institutional investors receive USD financing by entering into a loan agreement with Silvergate Bank, and Silvergate uses its proprietary payments network, Silvergate Exchange Network (“SEN”), to fund the loans. The investor’s collateral – bitcoin – is held by Fidelity Digital Assets in a separate, secure cold storage account.

“Silvergate is well positioned to offer SEN Leverage due to our lending authority and strong credit culture,” said Jon Melton, director of digital asset lending at Silvergate. “With Fidelity Digital Assets on board, we’re combining our exceptional lending program with a leading custody services platform, providing investors with greater access to capital.”

The initiative enables institutional investors who currently custody their bitcoin with Fidelity Digital Assets easy access to SEN Leverage. Investors looking to maintain their long bitcoin positions, for example, can use their bitcoin as collateral without the need to change custody providers or alter their position. The ability to finance positions using bitcoin as collateral is indicative of the maturing digital financial services infrastructure and gives investors additional opportunities to activate their bitcoin with a trusted custody provider.

“Like Silvergate, we recognize the opportunity to create a more seamless investor experience by helping institutions maximize capital efficiency, as well as the opportunity to strengthen the digital assets ecosystem through greater integration and collaborations like this,” said Christine Sandler, head of sales and marketing at Fidelity Digital Assets. “The ability to access SEN Leverage while maintaining stability of assets on our custody platform will help us deliver even more value and more choice to our clients to meet their evolving needs.”

Silvergate made SEN Leverage a full product offering in Q4 2020 and saw loan volume increase from $35.5MM in Q3 2020 to $82.5MM at the end of Q4. The robust lending product continues to grow its contribution to the overall success of the Silvergate banking platform.

Learn more about SEN Leverage here.

About Silvergate

Silvergate Capital Corporation (NYSE: SI) is the leading provider of innovative financial infrastructure solutions and services for the growing digital currency industry. The Company’s real-time payments platform, known as the Silvergate Exchange Network, is at the heart of its customer-centric suite of payments, lending and funding solutions serving an expanding class of digital currency companies and investors around the world. Silvergate is enabling the rapid growth of digital currency markets and reshaping global commerce for a digital currency future.

About Fidelity Digital Assets

Fidelity Digital Assets offers a full-service enterprise-grade platform for securing, trading and supporting digital assets. A business of Fidelity Investments, one of the world’s largest and most diversified financial services providers with more than $10.2 trillion in client assets under administration as of February 28, 2021, Fidelity Digital Assets combines the operational and technical capabilities of the broader Fidelity organization with dedicated blockchain expertise to deliver a completely new offering for institutional investors. Learn more at http://fidelitydigitalassets.com.

Fidelity Digital Assets^SM (“Fidelity”) is an independent company, unaffiliated with Silvergate. Fidelity is a service provider to Silvergate. There is no form of legal partnership, agency affiliation or similar relationship between the Silvergate and Fidelity, nor is such a relationship created or implied by the information herein.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210329005050/en/

FAQ

What is SEN Leverage and how does it work for institutional investors?

SEN Leverage is a product by Silvergate that provides USD loans to institutional investors, using bitcoin as collateral held securely by Fidelity Digital Assets.

How has the loan volume for SEN Leverage changed recently?

The loan volume for SEN Leverage increased significantly from $35.5MM in Q3 2020 to $82.5MM at the end of Q4 2020.

What role does Fidelity Digital Assets play in Silvergate's SEN Leverage?

Fidelity Digital Assets acts as a custodian for the bitcoin collateral in SEN Leverage, providing secure storage while facilitating USD loans.

How does the partnership between Silvergate and Fidelity benefit investors?

The partnership provides investors with easier access to capital without changing custody providers, maximizing capital efficiency.