Silvergate Capital’s planned stablecoin could benefit from the distribution and potential partnerships with Diem Association members and other money service providers, Wedbush analysts said in a note following news of the crypto firm’s deal to buy assets of Meta’s Diem.
- The distinction as to who controls the payment network is a significant positive, Wedbush said, and it puts Silvergate in “pole position to develop distribution partnerships with marquee consumer bands, including Meta.
- ”The purchase price represents good value for Silvergate given the sophisticated technology that is being acquired, and the acquisition should accelerate the launch of its stablecoin, “the report said.
- Silvergate’s acquisition of Diem’s technology and payment network “significantly accelerates” the company’s strategic plans and “materially adds to revenue upside,” B.Riley Securities said in a research report published Tuesday.
- The deal allows Silvergate to control the technology and build a payment network with greater revenue upside, B.Riley said.
- It also allows Silvergate to charge higher fees on transactions, and at a much higher rate versus the previous structure with Diem, B.Riley added.
- The acquisition could also give the crypto bank an advantage over other stablecoin issuers as it will be issued in a “regulatory friendly way” and can be integrated with the Silvergate Exchange Network (SEN).
- Silvergate confirmed on Monday that it was buying the technology and other assets from Diem, the stablecoin project from Meta (formerly Facebook), originally announced as Libra in June 2019.
- The company plans to launch a stablecoin by the end of this year, chief executive officer Alan Lane, said in an interview Monday.
- Silvergate shares closed 2.9% higher Tuesday following news of the deal.
Read more: Diem Confirms Shutdown as Silvergate Acquires the Project’s Assets