In its filing with the U.S. Securities and Exchange Commission (SEC), Silvergate Bank explained that the borrowers would provide digital currency as collateral “in an amount significantly greater than the line of credit being advanced.” At no time will the bank directly hold the pledged cryptocurrency, and the offer is limited to bitcoin initially.
Silvergate Bank plans to work with existing digital currency exchange clients to act as its collateral custodian for the loans “and to liquidate the collateral in the event of a decline in collateral coverage below levels required in the borrower’s loan agreement,” the bank informed the SEC.
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