Silvergate Bank's planned stablecoin could benefit from the distribution and potential partnerships with Diem Association members and other money service providers, Wedbush Securities analysts said in a note following news of Silvergate's deal to buy assets of Meta Platforms' (formerly Facebook's) Diem.
- The distinction about who controls the payment network is a significant positive, Wedbush said, and it puts Silvergate in "pole position" to develop distribution partnerships with marquee consumer brands, including Meta.
- ”The purchase price represents good value for Silvergate given the sophisticated technology that is being acquired, and the acquisition should accelerate the launch of its stablecoin," the report said.
- Silvergate's purchase of Diem’s technology and payment network "significantly accelerates" the company's strategic plans and "materially adds to revenue upside," B. Riley Securities said in a different research report published Tuesday.
- The deal allows Silvergate to control the technology and build a payment network with greater revenue upside, B. Riley said.
- It also allows Silvergate to charge higher fees on transactions and at a much higher rate versus the previous structure with Diem, B. Riley added.
- The deal could also give the crypto-focused bank an advantage over other stablecoin issuers because the bank's stablecoin will be issued in a "regulatory friendly way" and can be integrated with the Silvergate Exchange Network (SEN).
- Silvergate confirmed on Monday that it is buying the technology and other assets from Diem, the stablecoin project from Meta that was originally announced as Libra in 2019.
- The company plans to launch a stablecoin by the end of this year, CEO Alan Lane said in an interview Monday.
- Silvergate shares closed 2.9% higher Tuesday following news of the deal.
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