What deters most banks are the regulatory requirements. Silvergate must monitor transfers in and out of the accounts to comply with laws governing money laundering, terrorism and other illegal activities. It also must ensure that its clients have appropriate compliance practices in place, and that it can spot check individual transactions on the exchanges. Delays in the process can draw complaints from investors, but should something slip through, such as a transfer related to illegal activities, Silvergate could be on the hook for fines and other enforcement penalties. The bank has built out a team of about 25 employees to handle sales, compliance and operations for cryptocurrency businesses. Most banks, especially larger ones, have decided the risks aren’t worth the relatively small increase in deposits and transaction fees.

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