Cryptocurrency client base up by 122% in 2018, suggests Silvergate Bank’s report filed with the SEC

The advent of the bear market created a ruckus in the world of cryptocurrencies, with prices crashing, and market caps becoming a shadow of its highs in 2017. According to a recent report released by Silvergate Bank however, the number of clients coming into the field of cryptocurrency surged, despite the coins’ poor performances.

The report stated that in 2018, the number of its clients venturing into the digital assets world stood at 542, while it was just 244 in 2017. Total deposits also increased by 8 percent, from $1.46 billion to $1.58 billion. Despite the positive news however, Silvergate Bank warned users about the risks involved in the space. The bank stated,

“Our business is subject to many substantial risks and uncertainties you should consider before deciding to invest in our common stock … including risks that that the digital currency industry may not gain widespread adoption, that legal and regulatory uncertainty regarding the regulation of digital currencies and digital currency activities may inhibit the growth of the digital currency industry, that our low-cost funding strategy may not be sustainable, that our deposits may be adversely affected by price volatility.”

The report also listed out the factors affecting the development of the digital currency industry, which included factors such as price volatility and the involvement of the Securities and Exchange [SEC]. The report elucidated,

“…government and quasi-government regulation of digital currencies, their use, and intermediaries and other businesses involved in digital currencies, noting in particular that the SEC has taken action against several cryptocurrency operators and has raised questions whether certain digital currency exchanges must be registered with the SEC to continue operating;”

Other factors affecting the propagation of digital assets included the restrictions on or regulation of access, related to cryptocurrency exchanges. The SEC has been quite active with respect to the field of cryptocurrencies, something made evident by the comments from Valerie Szcepanik, the SEC’s advisor for Digital Assets. She said,

“I’ve seen stablecoins that purport to control price through some kind of pricing mechanism, whether it’s tied to the issuance, creation or redemption of another type of digital asset tied to it, or whether it is controlled through supply and demand in some way to keep the price within a certain band.”

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