Silvergate’s Acquisition of Diem’s Assets Positive for Stablecoin Launch, Analysts Say

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

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