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As a viable player in the digital currency industry, Silvergate Bank is broadening its base with the most notable players in the space.
Silvergate Bank, the subsidiary of Silvergate Capital Corp (NYSE: SI) has released its first-quarter Q1, 2022 earnings report in which it grew its transaction revenue from $7.1 million this time last year to $8.9 million today. The bank witnessed a lot of growth metrics in the past quarter revenue and net income grew by 93% and 94% year-over-year, respectively, to $59.9 million and $24.7 million.
Silvergate Bank’s Results in Q1 2022
The bank’s digital currency customers grew symmetrically year-over-year from 1,104 in the first quarter of 2021 to 1,503 this quarter. Despite this growth, the bank recorded a tapering down in the activities of its institutional clients in tandem with the bear action that engulfed the broader market in the first quarter.
As reported by the bank, the total Silvergate Exchange Network (SEN) transactions slumped to $142 billion from $167 billion this same time last year. SEN is a payment gateway that connects cryptocurrency exchanges to institutional investors as it relates to US Dollar and Euro transfers.
According to the shared data, there was a massive decline in Bitcoin (BTC) and Ethereum (ETH) trading volumes which fell by 33% this first quarter with a corresponding 35% slump in the SEN transfers for both digital currencies. The Silvergate bank’s business model helped its bottom line in a remarkable way as its custody or storage services saw significant growth, thanks in part to its 0% annualized charge for such deposits.
Per the earnings report, institutional investors deposited as much as $14.7 billion into the bank’s vaults compared to only $6.4 billion in Q1 2021. In fact, there has been exponential growth each quarter succeeding the first quarter of 2021. The more the deposits made into Silvergate Bank’s vaults, the more liquidity the financial institution will have to invest in interest-bearing opportunities with other banks, one of the primary ways it earns its revenue.
As a very viable player in the digital currency industry, Silvergate Bank is broadening its base with the most notable players in the space. As reported earlier by Coinspeaker, the bank provided a $205 million Bitcoin-collateralized loan to the business intelligence firm MicroStrategy Incorporated (NASDAQ: MSTR) last month, showcasing one of its core ways of earning revenue.
In addition to the broad user base it has on its SEN network, crypto exchange unicorn Binance.US was added to the network back in November 2020, a move that highlights how long it has been engraving itself into the most futuristic platforms operating in the nascent industry.
Silvergate Bank also acquired the intellectual properties of the now-defunct Diem Association, a stablecoin project that is backed by Meta Platforms Inc (NASDAQ: FB). The broadening of Silvergate Bank’s reach accounts for its sustained growth and lends hope to the institution’s future growth potential.