Silvergate's Acquisition of Diem's Assets Positive for Stablecoin Launch, Analysts Say

The crypto-focused bank plans to launch a stablecoin by the end of the year.

AccessTimeIconFeb 2, 2022 at 11:33 a.m. UTC
Updated May 11, 2023 at 7:12 p.m. UTC

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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