Signature Bank to Offer Bitcoin-Backed Cash Loans

Signature executives said that the bank is still in the process of finding custodians for the bitcoin-backed loans.

article-image
share

key takeaways

  • Signature Bank plans to start offering bitcoin-backed cash loans to digital asset clients
  • Signature enters the crypto loaning space 10 months after rival Silvergate launched bitcoin-backed loans in June 2020

Crypto-friendly Signature Bank is looking to expand more into the digital asset space. The New York-based bank plans to start offering bitcoin-backed cash loans to digital asset clients, executives announced on Wednesday’s earnings call. 

“We’re going to start doing some lending in the crypto, digital world,” said Joseph DePaolo, president and CEO of Signature, on the earnings call. “There’ll be very deep discounts, and quality custodians will allow us to liquidate when necessary. We’re going to crawl before we walk and we’re going to walk before we run.” 

Signature enters the crypto loaning space 10 months after rival Silvergate launched bitcoin-backed loans in June 2020. Others offering lending services include Gemini, BlockFi and Unchained Capital. 

Signature executives said that the bank is still in the process of finding custodians for the bitcoin-backed loans. Silvergate currently works with Fidelity, Coinbase and Anchorage, among others, to execute its lending services. 

Signature shares rose Wednesday after the bank, which manages $85 billion in assets, reported higher-than-expected first quarter earnings. The bank reported a record profit of $190.5 million, up from $99.6 million during the first quarter of 2020, mostly due to the success of the bank’s digital asset branch. 

“This quarter’s growth, which was across the board, was driven by the digital asset banking team which grew deposits by $4.4 billion,” said DePaolo. 

Signature also grew net interest income, a rarity for most banks with today’s interest rates, and deposits increased during the first quarter. Deposits from digital currency customers make up nearly 16% of total deposits for Signature.  

While the growing institutional interest in digital assets is mostly centered around bitcoin, which is up about 85% so far this year, DePaolo said that going forward, Signature is open to exploring other cryptocurrencies. He did not give specific interest rate yields for the bitcoin-backed loans, but said that they’d be more “than our traditional CNI,” or cash net income. 

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Graphics (5).jpg

Research

This month's PPGC mainly focused on discussing PIP-37: Ahmedabad Hard Fork, and the PIPs included with it. PIP-36, PIP-30 and PIP-35, included alongside PIP-37, were discussed also in the last PPGC notes. The only notable change since then has been the adoption of EIP-7702 over EIP-3074, with regard to PIP-22. Both are related to account abstraction, while EIP-7702 was proposed by Vitalik while EIP-7702 to eliminate vulnerabilities and ensure forward compatibility, by improving upon EIP-3074.

article-image

Plus, it’s time to finally address the Iggy Azalea in the room

article-image

There will be no altcoin season until we get ETFs for all the dog coins

article-image

Bitcoin miner is in discussions with other potential clients as it plans to use another 300 MW of capacity to support high-performance computing

article-image

Plus, Robinhood announced that it entered into an agreement to acquire Bitstamp, one of Europe’s largest and longest-serving crypto exchanges

article-image

Whether you decide to invest in bitcoin should be up to you, not the SEC or Gary Gensler

article-image

Plus, Sanctum’s upcoming airdrop for its new CLOUD token