Wednesday, February 2, 2022

Silvergate buys Diem-related assets for stablecoin push

Silvergate Capital in La Jolla, Calif., has acquired intellectual property and other technology assets tied to running a blockchain-based payment network from the Diem Group.

Silvergate said in a press release Monday that it paid $182 million in cash and stock. The assets Silvergate bought included development, deployment and operations infrastructure, along with the tools for running a blockchain-based payment network.

The deal includes proprietary software elements critical to running a regulatory-compliant stablecoin network. 

The company reiterated its plan to launch a stablecoin this year.

“In the digital asset industry, money moves across the globe around the clock,” Alan Lane, Silvergate’s CEO, said in the release. 

“Through conversations with our customers, we identified a need for a U.S. dollar-backed stablecoin that is regulated and highly scalable to further enable them to move money without barriers,” Lane added. “We are grateful to Diem and the community of engineers and developers who created this technology and have advanced it to its current evolution.” 

Silvergate said it expects to incur about $30 million of added costs this year as it integrates the acquired assets into its existing technology. 

Goldman Sachs and Holland & Knight advised Silvergate. Architect Partners, O’Melveny & Myers, Skadden, Arps, Slate, Meagher & Flom and Fenwick & West advised Diem.

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