Why Silvergate Capital Stock jumped 6.5% today

What happened

Actions of Silvergate Capital (NYSE: SI) rose to 6.9% on Wednesday, amid optimistic criticism from analysts of Morgan stanley. The title closed the trading session with a gain of 6.5%.

So what

The Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued a joint statement on Tuesday regarding expedited reviews of policies relating to cryptocurrency assets. This so-called “policy sprint” statement is widely seen as a big step towards a more mature regulatory framework for trading and owning cryptocurrency assets.

The three agencies hope to complete a broad collection of policies by the end of 2022. By then, investors and businesses should have more clarity on important issues such as digital asset custody, asset-backed loans. cryptocurrencies and the issuance of new cryptocurrency coins. .

Morgan Stanley’s Ken Zerbe reiterated his overweight ratings on Silvergate and Signature Bank (NASDAQ: SBNY), highlighting them as the two financial companies with the most to gain from regulatory advancements in the cryptocurrency industry.

“We believe that well-designed regulations will help promote the adoption of crypto assets and their associated services, which is ultimately positive for crypto banks (especially Silvergate and Signature in our coverage),” Zerba wrote.

Signature Bank took the bullish note in stride, closing Wednesday’s trading up 1%.

Image source: Getty Images.

Now what

Silvergate provides banking services for over 90 cryptocurrency exchanges. The company declared 1,305 digital currency customers at the end of the third quarter, up from 1,224 three months earlier and 928 a year ago. Cryptocurrencies are the backbone of Silvergate’s operations today, as digital deposits made up 96% of the company’s total managed deposits.

Yes, this company should benefit from regulatory certainty in the area of ​​cryptocurrencies. I’m not surprised to see stock prices jump when a respected analyst firm points out this indisputable fact.

This bank looks like a great cryptocurrency investment for people who don’t want to own real cryptocurrencies directly. The stock has now posted a 523% return in 52 weeks, topping a 201% gain for Bitcoin, but lagging behind Ethereum, at 620%. Silvergate manages digital deposits in a wide variety of cryptocurrencies, so you shouldn’t expect the stock chart to reflect Bitcoin prices at every turn.

SI chart

SI data by YCharts.

10 stocks we prefer at Silvergate Capital Corporation
When our award-winning team of analysts have stock advice, it can pay off to listen. After all, the newsletter they’ve been running for over a decade, Motley Fool Equity Advisor, has tripled the market. *

They just revealed what they think are the top ten stocks investors can buy right now … and Silvergate Capital Corporation was not one of them! That’s right – they think these 10 stocks are even better buys.

See the 10 actions

* The portfolio advisor returns on November 10, 2021

Anders Bylund owns shares of Bitcoin and Ethereum. The Motley Fool owns stocks and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Sallie R. Loera