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Alan Lane
Operation Choke Point 2.0: The Fall of Silvergate | Alan Lane
- Alan Lane built Silvergate from a 38-person, $300 million community bank in 2008 into a $15 billion asset institution serving the Bitcoin and crypto industry, pioneering the Silvergate Exchange Network (SEND) for 24/7 inter-exchange settlement. - In November 2022, following FTX's collapse, Silvergate experienced a historic 70% deposit withdrawal bank run but survived by selling $5 billion in securities over three weeks and borrowing from the Fed, taking $700 million in losses. - Lane acquired the Diem stablecoin project (formerly Libra) in January 2022 after the President's Working Group report recommended stablecoins be issued only by insured depository institutions, a move he believes put Silvergate on Washington's radar. - After surviving the deposit run, regulatory pressure intensified through two joint interagency letters in January and late February 2023 effectively requiring diversification away from crypto, making continued focused Bitcoin banking untenable. - Silvergate voluntarily wound down in March 2023, announced March 8th; Silicon Valley Bank failed March 10th and Signature Bank was seized March 12th—Lane questions whether Silvergate's announcement triggered broader contagion. - Lane believes Washington policymakers deliberately sought to cut the Bitcoin and crypto industry off from the banking system through regulatory action, separate from traditional prudential concerns, and he personally experienced debanking during this period.
#1059 Alan Lane On Traditional Banks Using Bitcoin As Collateral
- Silvergate Bank's strategic pivot four years ago to focus exclusively on the digital asset ecosystem, including selling off business lending, branch networks, and commercial real estate portfolios. - The Silvergate Exchange Network (SEND) processed nearly $200 billion in volume during Q2 2022, enabling 24/7 dollar-to-digital-asset liquidity without blockchain requirements. - SEND Leverage, a Bitcoin-collateralized lending product launched in January 2019, offering 65% loan-to-value with over-collateralization and private key control by Silvergate. - Net income growth from $20 million (Q2 2021) to $38 million (Q2 2022) despite crypto market downturn, driven by interest earnings on reserves and growing deposits without paying interest. - Planned U.S. dollar-backed stablecoin issuance following Silvergate's acquisition of the DM protocol, designed for payments and cross-border remittance. - Risk management philosophy prioritizing liquidity over traditional banking metrics; Silvergate maintains a loan-to-deposit ratio under 20% versus industry standard of 80–90%.
Alan Lane, CEO of Silvergate: Why Bitcoiners Shouldn’t Hate Banks
- Silvergate's founding in 2008 and Alan Lane's path into banking Bitcoin services starting in 2013 after reading about the industry and recognizing regulatory compliance gaps other banks were leaving unfilled. - The Silvergate Exchange Network (SEND), launched in 2017, which enables 24/7 fiat currency transfers between institutional clients—a major competitive moat built on customer feedback and API infrastructure. - Silvergate's customer base of nearly 800 institutions including exchanges, OTC desks, and institutional investors; the bank's focus on staying in its regulated lane rather than chasing speculative crypto opportunities. - Upcoming product launches: foreign currency exchange desk, collateralized lending on Bitcoin (pilot this quarter), and digital asset settlement services planned for next year. - The regulatory environment: Lane's view that existing U.S. laws already apply to crypto companies and that compliance, not innovation, should drive the strategy; no single federal money transmitter license needed. - Jack Dorsey's potential underestimation in the industry and the theory that developing nations may leapfrog Western infrastructure via Bitcoin and crypto-based income generation (mining, staking).