Silvergate is an FDIC-insured institution operating in the crypto ecosystem, with a balance sheet positioned to take advantage from higher rates.Its profits have been very much insulated from the volatility in the crypto market.The growth in the bottom-line has been amazing, but the stock price has lagged.RationaleSilvergate (SI) is a regulatory play on the Bitcoin ecosystem, with a profile to take advantage of higher interest rates. The company takes advantage of the Bitcoin adoption trend by getting zero-cost funding from institutions using the SEN network. The company applies those funds to high-quality assets (mostly variable-rate). Silvergate has also introduced a lending product called SEN Leverage. It is a Bitcoin collateralized lending product that allows its clients to use their Bitcoin as collateral for funding.The rationale here is very simple. The bank is an FDIC-insured institution operating in the crypto ecosystem, and there aren't many at this stage of the crypto scene. Most startups in the field are not even trying to get regulated, and the ones trying have been going through regulatory hell. Therefore, Silvergate is in an advantageous position to take advantage of the growth in crypto. While at the same time, it is in a good position to take advantage of the rising rates landscape.Silvergate's Business modelSilvergate is a traditional bank that became involved in Bitcoin because it needed funding alternatives....
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