Shares of Silvergate Capital (SI) climbed sharply higher Wednesday, jumping as much as 10.5%, before giving in to the overall market swoon. As of 3:05 p.m. ET, the stock was up just 0.1%.
The catalyst that sent the cryptocurrency-friendly financial institution higher was the announcement of an agreement with Crypto.com.
Crypto.com, one of the world's leading cryptocurrency exchanges, said it is expanding its on-ramp and off-ramp solutions by partnering with Silvergate Bank. The move will allow its institutional customers to deposit and withdraw money from the exchange in U.S. dollars.
In a blog post, the company said, "Crypto.com Exchange is pleased to announce our integration with Silvergate, the leading provider of innovative financial infrastructure solutions to the digital currency industry."
The move provides Crypto.com's institutional clients access to the Silvergate Exchange Network (SEN), "a near real-time payments platform that enables users to send U.S. dollars 24 hours a day, 7 days a week, 365 days a year," according to the announcement.
Crypto.com said the new capability was "highly requested" by its clients. "This should be the first time we have direct [U.S. dollar] deposits," said a spokesperson for Crypto.com, adding that its previous integration with Circle facilitated deposits and withdrawals using dollars and USD Coin -- a stablecoin whose value is tied to the U.S. dollar.
Silvergate Capital has a long history of supporting cryptocurrency operations, developing its network to help large institutions facilitate transactions between crypto exchanges and traders, and do so more efficiently. The banker was also instrumental in assisting the government of El Salvador to set up Chivo, its cryptocurrency wallet.
This announcement is just the latest in a growing body of evidence that cryptocurrency is entering the mainstream, and traditional financial institutions can play a crucial role in the process.