Why I'm Watching This Crypto Stock in July

Crypto bank Silvergate Capital (NYSE: SI) will report earnings on July 19, and investors will be interested to get a look under the hood after what has been a very difficult quarter for cryptocurrencies. Crypto prices have slumped all year, and trading volume is down as well. While investors will have a lot of questions regarding the quarter, here is the most important thing I'm watching.

Silvergate Capital has built a real-time payments system to better facilitate crypto trading between institutional investors and crypto exchanges. Because cryptocurrencies trade around the clock but the U.S. banking system doesn't operate in real time, Silvergate's platform, the Silvergate Exchange Network (SEN), is very appealing for crypto traders.

But Silvergate doesn't earn revenue by charging investors to join the platform. Rather, it benefits from digital-asset customers moving large sums of non-interest-bearing deposits into its custody. Because Silvergate doesn't have to pay out any interest on these assets to users, it can instead deploy them into interest-earning assets.

Source Fool.com