Signature Bank Competes  With Silvergate in Bitcoin-Backed Lending

Signature Bank Competes With Silvergate in Bitcoin-Backed Lending

New York-based Signature Bank will soon start offering its cryptocurrency clients Bitcoin-backed cash loans, executives revealed on an earnings call Wednesday. Signature serves the “over-the-counter trading desks”, crypto exchanges, blockchain companies and bitcoin miners.

On the company’s earnings call, Joesph DePaolo, CEO was pressed on whether or not deposits from these customers would stick around.

“Well, 30% of those deposits are in demand deposit accounts, because we’re getting the operating accounts,” DePaolo said. “We’ve been asked, ‘What about the big banks? The Chases and the Citibank, if they get into digital in a big way?’ Well, we’ve been competing with them for 20 years so we’re not worried about the big players.”

Signature Bank joins its rival Silvergate Bank, the La Jolla, Calif.-based bank, which serves major crypto firms such as Coinbase, Gemini and Kraken,which has been offering bitcoin-backed loans.

Signature Bank now has $14.4 billion in digital currency space, due to the banking deposits made from cryptocurrency customers, which is estimated at about $10 billion.

DePaolo, noted that Signature was open to entraining bitcoin and other digital assets as collateral but wouldn’t say what the interest rate yields would be on the loans except that they’d be more “than our traditional CNI” or cash net income”.

Signature also reported that it raked in $4.4 billion in deposits from digital assets customers in Q1 of this year.

“We want it to be a zero-loss business,” said DePaolo. “And so we’re only going to have it for the very, very best clients”. We’re going to underwrite it to death, have deep discounts and quality custodians. It will contribute in 2021, but not necessarily in the second quarter to a great extent.”

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