Bitcoin trading and transaction volumes surged at the pro-crypto Silvergate Bank in the first quarter of 2020.
According to an April 29 transcript filed with the U.S. Securities and Exchange Commission (SEC) on its Q1 2020 earnings, Bitcoin (BTC) trading volume on the Silvergate Exchange Network (SEN) grew 75% over the previous quarter. SEN’s BTC transaction volume also increased 118%, with more than 31,000 transactions.
As of April 2020, the bank is serving 850 digital currency-related clients including cryptocurrency exchanges and miners, custodians, and global investors.
Though many holders saw negative returns from the crypto bloodbath, Silvergate reported “a fairly significant increase” in deposits of $447 million BTC following the March 12 downturn. Based on the firm’s performance for the rest of Q1, Silvergate believes it is “well-positioned” for the additional expansion of digital assets and potential volatility in the future.
Volatility was a great test
The bank said the volatility had been a good test for SEN — which was joined by both Kraken and the Winklevoss’ Gemini exchange last year. Still in the pilot stage, the exchange offers leveraged trading to select institutional customers using BTC:
“One of the things that we were eager to test in the pilot was the mechanism by which we are—we monitor the price of the bitcoin collateral, and then also make the "margin calls" or our—whether our customers are covering collateral shortfalls and/or whether we have to liquidate bitcoin collateral. In order to really test that, you need to see some volatility in the asset class... we saw quite a bit of volatility during the first quarter, and I'm happy to say that our monitoring worked well”
Through this program, Silvergate approved $12.5 million in BTC collateralized loans for Q1.