Bitcoin trading and volumes of transactions soared in the first quarter of 2020 at the pro-crypto bank Silvergate.
According to a report that was filed with the U.S. Securities and Exchange Commission (SEC) on April 29. Bitcoin (BTC) trading volume on the Silvergate Exchange Network (SEN) grew 75 percent over the previous quarter on its Q1 2020 earnings. The number of SEN’s BTC transactions also grew 118 percent, with more than 31,000 transactions.
As of April 2020, the bank has represented 850 clients related to digital currency. Including cryptocurrency exchanges and miners, custodians, and global investors.
While many investors saw negative returns from the crypto-bloodbath, following the downturn on March 12. Silvergate announced “a fairly significant increase” in deposits of BTC $447 million. Based on the results of the firm for the remainder of Q1, Silvergate believes it is “well-positioned” for possible additional digital asset expansion and potential volatility.
Volatility was an ideal test
The bank said that volatility was a successful test for SEN — joined last year by both Kraken. And the Gemini exchange. The exchange, still in the pilot stage, provides leveraged trading to select institutional clients 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 scheme, Silvergate has approved $12.5 million in Q1 loans collateralized by the BTC.