How Silvergate Became the Leading Bank for Crypto Startups
Alan Lane has traveled a long way since the CEO of Silvergate Bank bought his first beat coin in 2013.
A small, deposit-hungry bank in La Jolla, Calif., Was at the time of the first encryption exchange as a client. Most bankers were bold steps for financial institutions because they saw bit coin as a fad, a scam or reputation and regulatory risk.
Lane, who addressed Friday at the BlockFS conference in New York, recalled:
"There was a company that was collecting money from a reputable [venture capital] company, they did not do illegal things and did not do anything immoral, but they were struggling to keep their bank accounts, I needed a deposit with the necessity. "
Five years later, Silvergate is considered the leading bank of Crypto startups in the United States. Promising exchange customers include Coinbase, Gemini, Kraken and bitFlyer. And as revealed by the bank's public public offering (IPO) submitted earlier this month, the bank worked with 483 startup ventures to deposit about $ 1.7 billion in the quarterly balance sheet as of the third quarter of 2018.
In a panel discussion on Bankbitcoin start-ups, Silvergate announced that it invited exchange executives to meet with bank regulators in person.
In the early days, he worked exclusively with start-ups with expertise in traditional banking legal expertise, and devoted entirely to day-to-day monitoring for thorough compliance.
At that time, most of the Crypto start-ups at that time were juggling executives with a variety of responsibilities and did not cut them for banks or regulators. "The chief compliance officer is not a multi-hat type person," Lane said.
Coin base club
Nick Rosenberg, director of the Metropolitan Bank in New York, said one of the few companies able to compete with Silvergate in the same space is aggressively looking for a variety of encryption startups.
Lane spokesman, however, said Silvergate has narrowed its focus for years to provide services to exchanges, prescription-free trading desks and institutional investors, almost exclusively.
Referring to Silverer and Metro sharing Coinbase as a mutual client, Lane said:
"Coinbase is probably the best organized company in the ecosystem, and Coinbase will probably achieve its goal with us and all other banks."
Lane said the cryptographic firm could become a remnant of an early strategy when it ties into several banks.
Silvergate integrates with the APIs of the Exchange platform to differentiate you from other banks in your organization so that institutional investors with Silvergate accounts can process transactions or deposits 24 hours a day, even if the bank is closed.
It also provides a peace of mind that investors will be able to sustain the money in the normal course.
"It's equally powerful when we get out of the lamp," Lane said. "We all heard about hacked exchanges."
Block Chain Data
The availability of data from public books allows Silvergate to reassure itself in areas that have long been used in public minds in relation to long, erroneous or careless activities.
Silvergate initially established a continuous monitoring process that matched the deposit amount with Bitcoin block chain data. Lane said today that employees can visit their exchange office on a quarterly visit to provide up-to-date monitoring tools for block-chain-based assets in addition to daily monitoring and day-to-day communications.
"We wanted to see both sides of the deal," Lane said. "If you wire $ 50,000, send me a block chain address … What I want to see in the block chain is a transaction that matches the $ 50,000 value."
Silvergate often uses the same meticulous method of requiring Gemini and Coinbase to use an external auditor for assets such as dollar-denominated money, which began this year, in order to ensure that the customer's exchange records match the records of the foreign exchange bank.
Lane originally laughed at the phenomenon of cryptocurrencies designed to defend her own monopoly, but now the bank is looking for a "stable coin" to learn more.
When he enrolled a new password client, Silvergate came to the conclusion as to why it was slow and optional.
"It's important to be right because illegal content across our platform can harm the integrity of the business and the system, so we protect it very much."
Alan Lane (right) Speaking in a Block FS image via CoinDesk
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