Institutional Crypto Trading Activity Declines While Silvergate Bank Q1 Revenue Soars

On Tuesday, Silvergate Bank, a crypto-fiat gateway network designed for financial institutions, announced its first-quarter 2022 results. During the period, its revenue and net income rose 93% and 94% year over year, respectively, to $59.9 million and $24.7 million. The company is best known for its Silvergate Exchange Network (SEN), which facilitates dollar and euro transfers between cryptocurrency exchanges and institutional investors.

Despite the revenue growth, institutional interest in cryptocurrencies was hit hard in the first quarter due to the ongoing bear market. Silvergate said the amount of SEN transfers it facilitated fell from $167 billion in the first quarter of 2021 to $142 billion in the first quarter of 2022. Meanwhile, as part of a broader industry trend, bitcoin and ethereum spot transactions fell 33% year-over-year in the first quarter of 2022 to $1.046 trillion.

However, the company’s cryptocurrency storage business has also seen significant growth. Due in part to an annualized deposit cost of 0.00%, institutional investors placed an average of $14.7 billion in digital assets in Silvergate, compared to $6.4 billion in Q1 2021.

Cointelegraph previously reported that Silvergate acquired Mark Zuckerberg’s stablecoin project Diem for $182 million after the project was discontinued. Silvergate currently sees expanding its stablecoin infrastructure as a key growth area. Currently, like traditional banks, the company generates the vast majority of its revenue from interest income; that is, using borrowers' deposits as collateral to make loans, buy interest-bearing securities or deposit them into interest-bearing accounts at other banks.

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