Fidelity to custody Silvergate’s BTC from SEN Leverage
2 min readTL;DR Breakdown:
- Silvergate has chosen Fidelity as a custodian for its BTC-collateralized loan service.
- The service allows institutional investors to obtain US dollar loans using their BTC as collateral.
Silvergate Capital Corporation, the holding company for Silvergate Bank, has appointed Fidelity Digital Assets as a custodian for its BTC-collateralized US dollar loans.
Through SEN Leverage, Silvergate allows BTC investors to access capitals in US dollars under a loan agreement with their BTC as collateral. Going forward, the collateral (BTC) will be secured by Fidelity, a leading institutional-grade execution and custody service provider.
Silvergate appoints Fidelity as custodian
BTC-collateralized loans essentially help institutional crypto investors to maintain their long BTC positions. They would use the cryptocurrencies as collateral to obtain US dollar loans from the Silvergate bank, rather than selling off their BTC holding to raise capital. The digital assets will now be secured by Fidelity Digital Assets, according to the announcement on Monday.
“Silvergate is well positioned to offer SEN Leverage due to our lending authority and strong credit culture. […] 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 director of digital asset lending at Silvergate, Jon Melton, said.
Between Q3 and Q4 of 2020, the loan volume on the BTC-collateralized SEN Leverage increased from $35.5 million to $82.5 million, per the announcement.
Silvergate is seen as an innovative and crypto-friendly bank in the cryptocurrency space. It onboarded popular exchanges like Kraken, CEX.io, Gemini, and Coinbase onto its Silvergate Exchange Network (SEN), which allows for a robust transfer of funds between account holders. With SEN, the crypto exchanges are able to support US dollar deposits and withdrawals 24/7.
