Silvergate brings on Fidelity Digital Assets as a custodian for its bitcoin-collateralized loans

The crypto-friendly bank Silvergate announced Fidelity Digital Assets as a custodian for its collateralized lending service, SEN Leverage.

The bank has been looking to further build out the service, which utilizes its payments platform to deliver U.S. dollar loans collateralized by bitcoin. 

During the Q4 2020 earnings call, Silvergate CEO Alan Lane said the bank was looking to further monetize its Silvergate Exchange Network (SEN) platform, the bank's payment network, through digital asset lending and custodial services.

Since a pilot last year, Lane said the SEN Leverage offering has become a "core product," and he expects increased demand over this year. The underlying SEN Network has seen increasing transfer volumes each quarter.

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Silvergate uses SEN to fund the loans, and partnered custodians hold the bitcoin collateral in a separate cold storage account. Adding Fidelity Digital Assets as one of those partners means the institutional investors who already custody their bitcoin with the asset management giant's crypto arm have more seamless access to SEN Leverage.