Silvergate Capital to benefit from Signature Bank's crypto retreat: BTIG

Signature Bank's ( NASDAQ: SBNY ) newly constructed plan to retreat partially from its digital asset-related businesses has "opened a new window of opportunity" for rival Silvergate Capital ( NYSE: SI ), BTIG analyst Mark Palmer wrote in a note Thursday. Joseph DePaolo, SBNY's CEO, said Wednesday that the lender would limit its digital currency deposit exposure to less than 15% of total deposits from 23.5%, according to the note. In addition, DePaolo noted that the company is planning to stop providing services to stablecoin issuers. SBNY's Signet, a regulated blockchain-based digital payments platform launched in June 2020, was said to have been viewed as a primary alternative to the Silvergate Exchange Network for crypto-related firms looking to transfer fiat currency, such as the U.S. dollar or euro, to other platforms. In essence, "we expect platforms that find themselves no longer welcome to use Signet because of its newly imposed deposit limits are likely to turn to SI as an alternative," Palmer, who views SI stock as a Buy, contended. Prominent crypto exchange Coinbase Global ( COIN ) said in October it will leverage Signet to provide its institutional clients a real-time settlement and payment rail. And given Silvegate's ( SI ) development of its own stablecoin, Signature's pullback from providing services to stablecoin issuers (such as USD Coin ( USDC-USD ) issuer Circle) "could enhance the potential for the company’s offering to gain traction after it launches," the note read. In a broader risk-on session, both SI, +3.5% , and SBNY, +1.7% , stocks drifted higher at the time of writing. Earlier this week, (Dec. 7) Signature Bank lost its bull rating at RayJay on potential growth slowdown .