What’s Going on with Silvergate Capital Corp?
Silvergate Capital Corp (SI), headquartered in La Jolla, California, is set to become the sole issuer of U.S. dollar-backed Diem stablecoins, according to a Silvergate news brief released yesterday, May 12. Silvergate Capital Corporation's subsidiary Silvergate Bank, in partnership with Diem Networks U.S. Inc., will be the sole issuer of the blockchain-based Diem USD. As of this morning, May 13, SI stock was down 1.22% at $26.90 per share.
What Does This Mean for SI?
This collaboration between Silvergate and Diem Networks will see Silvergate stablecoins — or Diem USD — backed by U.S. dollars issued exclusively by Silvergate. Fiat dollars (government-issued currency not backed by commodities like gold) will be able to be changed into virtual stablecoin via a “minting” or “burning” process.
“We believe in the future of U.S. dollar-backed stablecoins and their potential to transform existing payment systems,” Silvergate CEO Alan Lane commented. Prior to yesterday’s announcement, both Diem and Silvergate have been working for months on the technology and security measures needed to support this currency system, as well as to comply with regulatory requirements. The aim of this currency platform is to seamlessly provide the benefits of blockchain technology to businesses and consumers.
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Silvergate Capital Corp is a provider of innovative financial infrastructure solutions and services. Its solutions and service offerings include Silvergate Exchange Network, Cash Management Solutions and Deposit Account Services. Its customers include U.S. exchanges and global investors in the digital currency industry. The company also provides financial services that include commercial banking, business lending, commercial and residential real estate lending, and mortgage warehouse lending.
