Silvergate Capital Delays Plans to Launch Its Own US Dollar-Pegged Stablecoin

The company executives said the delay is related to regulatory compliance, not technical issues.

Written by Shomik Sen Bhattacharjee, Edited by Richa Sharma | Updated: 20 October 2022 19:45 IST

Photo Credit: Silvergate Capital

Silvergate Capital no longer plans to launch its long-awaited stablecoin before the year’s end

Highlights

Silvergate's hold-up isn't because of technological hurdles
The crypto bank reported third-quarter earnings on Tuesday
Diem was bought by Silvergate Capital Corporation in January

Silvergate Capital, a crypto bank holding company, has decided to delay the launch of its long-awaited stablecoin, CEO Alan Lane said during the company's third-quarter earnings call on Tuesday. California-based Silvergate Capital, the parent of Silvergate Bank, announced it was working on its own payments-focused stablecoin in January after acquiring related intellectual property, infrastructure and tools from blockchain payment network developer Diem Group. The delay is not due to technical issues, Lane said during the call, underscoring that the technology was ready when Silvergate acquired it from Diem.

"Unfortunately, we no longer expect that to happen this year," Lane said. The technology is ready to go but the firm is “working with regulators and policymakers and making sure we get this right," Lane elaborated. "We still feel very strongly that we are in the best position of any other bank out there to launch a regulatory-compliant, safe and sound, tokenised dollar on the blockchain," he added.

Silvergate Bank is one of the largest crypto banks currently in the market. At the beginning of 2022, Silvergate Capital acquired the crypto technology from Diem, the stablecoin project of Meta platforms (formerly Facebook) launched earlier in 2019.

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Silvergate has been offering loans to several crypto firms while accepting Bitcoin as collateral. Earlier this year, business intelligence firm MicroStrategy took a major loan from Silvergate while putting its Bitcoins as collateral.

MicroStrategy said that they will use these funds to buy more Bitcoins. This was also the largest loan secured by any Bitcoin holding company. Company CEO Alan Lane stated that he is still bullish about the Bitcoin lending business and expects it to grow with time.

However, with the broader market condition, Lane remains practical and expects the pain in the market to continue for a while. “Over the coming quarters, the crypto industry may still pose challenges for some exchanges and crypto funds. However, at some point, all that will be over, and then we will just be waiting for what is the next catalyst,” he said in an interview with CoinDesk in July.

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