Here’s what the bank that bought assets from Zuckerberg’s crypto project plans to do with them
- Silvergate Capital CEO Alan Lane told CNBC on Monday the bank holding company hopes to launch a stablecoin by the end of this year.
- The comments follow Silvergate's confirmation Monday that the California-based firm was buying assets and intellectual property from Mark Zuckerberg's beleaguered cryptocurrency project.
- "We think the potential worth is off the charts when we think about using the blockchain technology for payments and remittance," Lane told CNBC's Jim Cramer.
Silvergate Capital CEO Alan Lane told CNBC on Monday the bank holding company hopes to launch a stablecoin by the end of this year, following its acquisitions of assets and intellectual property from Mark Zuckerberg's beleaguered cryptocurrency project.
The California-based financial firm, which through its subsidiary Silvergate Bank operates the crypto-focused payments platform Silvergate Exchange Network, confirmed it was buying assets from the Diem Group on Monday. Silvergate had previously been a partner on the Facebook-backed project.
"The Facebook engineers that developed this over the last couple years are truly world-class engineers," Lane told "Mad Money" host Jim Cramer in an interview. "We were working last year with Diem and we got to know the team very well, and we couldn't be more excited to, essentially, be taking the reigns and bringing a stablecoin to market hopefully later this year."
With Lane at the helm, Silvergate Bank is known for being one of the first traditional banks to embrace digital currencies. Its Silvergate Exchange Network offers account holders the ability to execute real-time, 24/7 transfer among themselves. Crypto trading platforms such as Coinbase Global and Gemini are part of the Silvergate Exchange Network.
Lane told Cramer that Silvergate hopes to expand the everyday usefulness of stablecoins, which are a type of digital asset that has its value pegged to traditional currencies such as the U.S. dollar. Right now, Lane said they're mostly used in crypto trading.
"We think the potential worth is off the charts when we think about using the blockchain technology for payments and remittance," Lane said, after Cramer asked how much Silvergate thinks Diem's assets are worth. The Wall Street Journal reported last week that the bank paid about $200 million, citing an anonymous source.
The Silvergate Exchange Network is already used by existing stablecoin issuers to create and redeem the digital tokens, Lane said. "But again, those are primarily used for cryptocurrency trading. Where we see the opportunity is creating a stablecoin that could be used by folks .... to pay for things."
"It's kind of the original promise of bitcoin, but folks don't want to be spending their bitcoin with all that volatility. But the blockchain technology is here, and we think that's what a Silvergate-issued stablecoin can provide," he said.
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