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Facebook’s Old Crypto Project Undergoes Metamorphosis

Silvergate Capital CEO talks with  Jim Cramer about acquisition of blockchain assets from Diem.

A financial firm that has been a leader in cryptocurrencies has now acquired the tools to build its own crypto payment system.

Alan Lane, president, and CEO of Silvergate Capital  (SI)  told Jim Cramer on a recent episode of the Mad Money TV show how the fast-growing company is now banking on crypto. Lane is also CEO of the subsidiary Silvergate Bank.

Silvergate recently announced the acquisition of blockchain assets from the Diem Group for $50 million and 1.22 million shares of the company. Shares of Silvergate have risen more than 700% since March 2020.

Facebook, now called Meta, attempted to enter the blockchain payments space in 2019 with its Libra initiative, backed by big players such as credit card issuers. But the plan quickly ran into regulatory headwinds and many significant participants, such as credit card issuers dropped out. 

It rebranded the Libra association, which included Spotify  (SPOT) , Uber  (UBER)  and Lyft  (LYFT) ,  as Diem in 2020.

Lane said that Silvergate was one of the first banks to embrace cryptocurrencies. It realized early on that crypto was a great way for them to grow its deposit base to keep up with loan growth. 

Silvergate acquired a lot of powerful intellectual property in the recent deal, Lane added. The Facebook engineers have created a unique product, he said, and have allowed Silvergate to introduce its own stable coin product later this year.

Facebook/Meta has decided against having its own currency.

There are fast-growing opportunities for using cryptocurrencies for payments, and Silvergate plans to be at the forefront, Lane told Cramer.

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