In an analysts’ note, Goldman Sachs began its coverage of Silvergate Capital with a neutral rating, expressing optimism about its growth prospects but also concerns about regulatory uncertainty and surging competition from traditional banks.
The investment bank, which has warmed to the crypto space over the past year, highlighted Silvergate’s strong network of customers and growth opportunities, stemming from an increasing flow of fiat deposits. Silvergate Capital is the bank holding company for Silvergate Bank, which provides products and services for cryptocurrency investors.
Silvergate ended its first quarter with $6.8 billion in crypto-related deposits but Goldman Sachs believes “organic client growth” could raise that to $20 billion.
The analysts believe that Silvergate could generate up to 50% higher net income on those deposits by moving even just part of them into an investment portfolio. It also saw approximately $80 billion in demand for collateralized crypto-backed loans.
Goldman Sachs also viewed Silvergate as “an acquisition candidate,” but also mentioned an unsettled regulatory environment and a growing interest among established financial services firms in the crypto space. “We view the large banks as the most significant threat to Silvergate’s business,” the analysts’ note said.
Separately, Silvergate announced Tuesday that Michael Lempres would become chairman of the board and Aanchal Gupta would join the boards of directors for the company and Silvergate Bank. Lempres has been a member of Silvergate’s board since 2019. Among his earlier positions, he was executive in residence at venture firm Andreessen Horowitz and chief legal and risk officer at Coinbase.
Gupta has served in several high level technology security roles. As vice president of Azure, Microsoft’s cloud computing platform, she currently oversees cloud security products, and she previously served as chief information security officer for Novi (previously Calibra), Facebook’s cryptocurrency project.
Source: Coindesk
