Crypto bank holding company Silvergate Capital no longer plans to launch its long-awaited stablecoin before the year’s end, CEO Alan Lane said during the company’s third-quarter earnings call on Tuesday.
La Jolla, Calif.-based Silvergate Capital, the parent of Silvergate Bank, announced it was working on its own payments-focused stablecoin in January after acquiring related intellectual property, infrastructure and tools from blockchain payment network developer Diem Group. Diem’s U.S. subsidiary first announced a partnership with Silvergate Capital in May 2021.
The delay is not due to technical issues, Lane said during the call, underscoring that the technology was ready when Silvergate acquired it from Diem. Instead, it appears to be related to preparing the stablecoin for regulatory compliance.
“It’s working with the regulators and with policymakers, and just making sure that we’ve got this right,” Lane said. “We still feel very strongly that we are in the best position of any other bank out there to launch a regulatory-compliant, safe and sound, tokenized dollar on the blockchain.”
Regulatory discussions focus on how the stablecoin market would grow significantly if payments were to become a prominent use case for these digital assets, Silvergate Bank’s Chief Strategy Officer Ben Reynolds said. That dialogue addresses questions about what stablecoin payments would look like at scale, what kind of risk-based approach would be needed, how funds would be invested and what kind of consumer protections would be sufficient.
“What’s become clear to regulators and policymakers is that using the technology for payments is a massive opportunity at a massive scale that really dwarfs the $150 billion that’s available today,” he said.
Interest in stablecoin regulation has ramped up over the past few months, especially since the Terra ecosystem and its algorithmic stablecoin collapsed in May. However, a timeline for any forthcoming legislation remains to be seen. While a congressional stablecoin bill is in the works, Rep. Jim Himes, D-Conn., said on Tuesday at a financial conference that it would be unlikely to pass anytime soon due to elections.
Silvergate’s Lane did not provide an updated timeline for launching its stablecoin. He said the bank would work closely with regulators to make sure it doesn’t “hit any speed bumps along the way.”
Silvergate’s stock fell Tuesday after the company reported a third-quarter earnings per share (EPS) figure that missed analysts’ estimates.
