Citadel Securities, Credit Suisse and Deutsche Bank invest millions in crypto infrastructure projects
Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!
(Kitco News) Large financial institutions appear to be unfazed by the ongoing struggles of the cryptocurrency market as Tuesday brought news that some of the largest players in the game, including Citadel Securities and Susquehanna Advisors Group, have purchased shares in Silvergate Capital, a holding company that specializes in offering crypto banking services.
Citadel Securities, which is an established market maker, disclosed in a Securities and Exchange Commission (SEC) filing in December that it has acquired a 5.5% stake in Silvergate Capital (SI). According to the filing, Citadel now owns approximately 1.73 million shares in Silvergate, valued at roughly $26.5 million based on the current SI price of $15.30.
After the investment by Citadel was revealed, Susquehanna Advisors Group also reported a 7.5% stake in the crypto-friendly bank, representing 2.36 million shares worth approximately $36.1 million.
The struggles that Silvergate has faced over the past few months have been well documented as the bank has had to fight to stay solvent after receiving more than $8.1 billion in customer withdrawal requests during Q4 2022, which resulted in losses of $718 million. To help cut operating costs, the bank laid off 40% of its staff and was forced to liquidate debt.
Following the revelations from Citadel and Susquehanna, the price of SI rallied 18.15% from Monday’s close of $14.71 to a daily high of $17.38, but has since pulled back to $16.40. SI is currently one of the most shorted stocks on Wall Street, and was the most shorted on Jan. 31.
Investing in blockchain infrastructure
Across the Atlantic, Credit Suisse (CS) and Deutsche Bank (DBK) have also waded deeper into the crypto waters through their participation in a $65 million Series B funding round for Geneva-based Taurus Technology, a digital asset infrastructure provider for European financial institutions.
According to the announcement from Taurus, the firm plans to use the funds to support its growth strategy, which includes hiring top engineering talent and maintaining “the most stringent security, risk and compliance requirements across product lines, processes and organizations.”
The firm also plans to utilize the funds to expand its presence across Europe and the United Arab Emirates and has future plans to expand to the Americas and South-East Asia.
|58% of institutions now hold crypto, up 6% from 2021 - Fidelity|
Some of the other institutional investors that took part in the Series B funding round for Taurus include Pictet Group and Cedar Mundi Ventures, while Series A investors include Arab Bank Switzerland and Investis, a publicly-listed Swiss real estate group.
Taurus specializes in offering custody, tokenization and trading of digital assets, including support for staking and decentralized finance (DeFi). The firm recently made headlines when it helped the independent Swiss private bank Cité Gestion tokenize its shares, becoming the first private bank to tokenize its own shares under Swiss law.
These latest funding rounds show that despite the struggles the crypto industry continues to face, there is still plenty of capital from major financial institutions ready to be invested in promising blockchain offerings, especially for projects providing infrastructure for the broader digital asset ecosystem.