Bitstamp, the twelfth-largest cryptocurrency exchange, has landed a deal with cryptocurrency-friendly Silvergate Bank, under which Bitcoin leveraged trading will be piloted.
Leveraged trading allows traders to borrow funds in order to boost their potential profits, but is also comes with substantial risks, including the possibility of losses that exceed a trader’s initial investment, which drove exchanges to suggest that amateur investors should not to get involved in leveraged trading.
Under the synergy between Bitstamp and Silvergate, the exchange will serve as the launch partner for the bank’s Silvergate Exchange Network (SEN) Leverage service. In the meantime, leveraged trading will be offered to a number of select institutional investors, and Bitcoin shall be the sole collateral to be supported by the service and to be custodied by Bitstamp as Silvergate Bank’s first exchange partner.
Backed by its crypto-friendly attitude, Silvergate Bank has inked partnerships with major cryptocurrency firms, including Gemini, the cryptocurrency exchange founded by the Winklevoss twins, which announced last August that it joined Silvergate’s SEN network to offer 24/7 fiat transfers.
Furthermore, a disclosure to the U.S. Securities and Exchange Commission filled by the bank in March 2019 revealed that it served 542 digital currency-related clients including cryptocurrency exchanges and miners, custodians and global investors, and others.