Metropolitan Commercial Bank is on the verge of exiting the cryptocurrency market, with only $278.5 million in crypto-related deposits left, according to a filing with the Securities and Exchange Commission (SEC) made on April 18th. The filing states that the bank’s “previously announced exit from the crypto-related vertical is almost complete,” and highlights that its total core deposits, excluding crypto clients, were $4.9 billion as of March 31st. Metropolitan Bank Holding (MBH), the parent company of the New York-based bank, announced in January that it would be terminating crypto-related services following recent industry developments and regulatory pressure. The decision came shortly after former crypto exchange FTX collapsed and its founder, Sam Bankman-Fried, was hit with multiple fraud charges.
Metropolitan Bank had been serving four crypto clients, which accounted for around 1.5% of its total revenue (approximately $1 million) and 6% of its total deposits (which amounted to $342 million) according to the firm’s Q3 2022 results. However, U.S. banks have been cautious about serving the crypto industry, following the spectacular collapse of three of the most prominent banks – Silvergate Bank, Silicon Valley Bank, and Signature Bank. Provident Bancorp, another bank, blamed the “crypto winter” as the primary cause of the recent banking crisis. “Over the past few months, the country has witnessed a chain of events that shook the foundations of the banking industry,” wrote co-CEO Joe Reilly and Carol Houle in a shareholder’s letter dated April 18th. “These events came on the heels of a cryptocurrency downturn that affected many businesses, including some that we supported through our digital asset lending initiatives,” they wrote.
This recent crisis has left many crypto-related companies unbanked and seen several firms trying to move their banks offshore. Meanwhile, some of the domestic banks, including BNY Mellon, who are still servicing crypto-related clients, said they are taking a slower approach to taking on newer digital asset-exposed clients. However, it is worth noting that the banking crisis is not entirely the fault of the crypto industry. In fact, many experts argue that the crisis is more a result of poor banking practices and a lack of regulation.
Despite the challenges faced by banks in the crypto space, some institutions are still committed to serving the industry. For example, JPMorgan recently announced plans to launch a new digital asset-focused business unit, which will be led by the bank’s head of digital assets, Onyeama Okorie. The unit will be responsible for developing JPMorgan’s blockchain and crypto-related projects, as well as exploring new opportunities in the space.
In conclusion, Metropolitan Commercial Bank’s exit from the cryptocurrency market is a significant development that highlights the challenges faced by banks in the space. While some institutions are still committed to serving the industry, others are taking a more cautious approach. Ultimately, the future of banking in the crypto space remains uncertain, and it is likely that we will continue to see significant developments in the coming months and years.