The reputable cryptocurrency venture capital firm Digital Currency Group (DCG) has reported that they have invested $114 Million in Silvergate Capital Corporation, the holding firm of the bitcoin startup-friendly Silvergate Bank.
In a tweet on February 26, DCG confirmed their investment showing that they were thrilled to welcome Silvergate Bank to the DCG household.
Following an announcement by Silvergate, the company stated that it had sold shares worth 9.5 million by a private placement spawning $114 million for supporting Silvergate bank’s fintech deposit initiatives and business banking and residential lending activities.
Although Silvergate Capital Corporation did not reveal the investor, there is information that DCG is the most likely investors as they posted a similar investment milestone on their twitter handle.
In a press release, Alan Lane Silvergate’s president and the chief executive officer said, “We are very pleased with the outcome of our private placement, which generated broad-based support from both traditional bank investors and other strategic investors.”
Although the amount of investment remains undisclosed, DCG’s move is significant and relevant as Silvergate’s stance in supporting cryptocurrency startups is known.
Most cryptocurrency firms have initially had a rough time being accepted as customers by banks. In January 2018, Indian Banks limited and suspended several accounts of crypto exchanges while over the past weekend Bangkok Bank dismissed Thai Digital Asset Exchange account.
There have been challenges since 2014 in the cryptocurrency industry like difficulties in receiving banking services from different financial institutions. It’s noted that many banks have refused to open crypto accounts for specific firms and sometimes to close, suspending or limiting them without any good reasons.
However, Silvergate Bank has offered bank accounts for bitcoin startups and even urged those that shied away fearing bitcoin-related risks to reconsider. It was indicated in a previous article by CoinDesk that Silvergate Bank supported 15 cryptocurrency startups as of May 2016. Two years down the line, the number has probably doubled or increased.
This investment is good news for companies such as Tether, a digital token powered by fiat currency that faced banking frustrations in 2017 when Tether’s Taiwanese Banks froze all the International wires Tether.