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Silvergate, Bitstamp link up to let institutions trade with leverage collateralized by bitcoin

Yilun Cheng

Luxembourg-based crypto exchange Bitstamp has become a launch partner for Silvergate Bank’s new product, SEN Leverage.  

Developed by California state-chartered Silvergate Bank, the Silvergate Exchange Network (SEN) enables real-time, around-the-clock deposits and withdrawal of U.S. dollars. Since launch, the network has on-boarded a series of big-name exchanges, including Kraken in November and Gemini in August.

SEN Leverage uses SEN to fund loans and process repayment on a 24/7 basis, according to a press release. The product targets institutional clients and allows them to trade with leverage collateralized by bitcoin.

Founded in 2011, Bitstamp currently supports five cryptocurrencies for trading (BTC, ETH, LTC, XRP, BCH) and saw an average daily trading volume of around $113 million in 2019.

It worked with Silvergate Bank during SEN Leverage’s development phase and will now manage and provide custody for the bank’s bitcoin collateral, the press release said.

“We see growing demand from our institutional customers to access greater trading capital,” said Miha Grčar, head of business development at Bitstamp. “We already use SEN to enable withdrawals and deposits to Bitstamp accounts within minutes at any time and look forward to offering our clients additional flexibility to manage their bitcoin positions through SEN Leverage.”

Silvergate's existing presence in the crypto space is significant, based on the number of industry clients it maintains. Silvergate's Oct. 28 filing with the U.S. Securities and Exchange Commission (SEC) shows that as of Sept. 30, the bank is serving 756 cryptocurrency clients, a more than 15% increase over June.