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Crypto

Meet the San Diego Bank That Handles Most of the Cryptocurrency Industry

Silvergate Bank of San Diego describes itself as a community bank, with clients that include a nearby chain of milkshake stores and a local architectural firm. But in the past year, Silvergate has taken on a new role: the go-to bank for the cryptocurrency industry.

Most U.S. banks steer clear of companies involved with digital currencies, which some worry can be used to launder money or fund illegal activities. But Silvergate has courted the industry aggressively. It provides financial services to 250 crypto-related exchanges, wallet services, investment funds and other companies, CEO Alan Lane said in an interview with The Information. That is likely more cryptocurrency clients than any other U.S. bank, and includes Coinbase’s GDAX exchange, Kraken, bitFlyer and Gemini, according to investor documents obtained by The Information.

Whether early leaders can maintain their position remains an open question. Mr. Lane said Silvergate is looking at other services it could provide, such as custodial services for holding cryptocurrencies and lending. “There will definitely be more competition coming in,” he said, but added that the upside still isn’t enough for most banks. “Because of that, I think it might still take a while.”

Soham Bhatia commented on this article.
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“It really feels like Silvergate is banking the entire industry at this point.”