Metropolitan Commercial Bank is leaving the crypto business.
The $6.4 billion-asset bank in New York City, a unit of Metropolitan Bank Holding Corp., made the announcement on Monday. The company stated that the decision was driven by recent developments in the crypto-asset industry and changes in the regulatory environment for banks.
“Crypto-related clients, assets and deposits have never represented a material portion of the company’s business and have never exposed the company to material financial risks,” said Mark DeFazio, president and CEO of MCB, in a press release. He also said that the decision traces back to 2017, when MCB pivoted away from crypto.
According to the release, MCB has four active institutional crypto-asset related clients, to which the bank provides debit card, payment and account services. They account for about 1.5% of total revenue and 6% of total deposits at the bank. MCB expects to close out these relationships entirely during 2023.
The way forward for banks involved in cryptocurrency, after the collapse of cryptocurrency exchange firm FTX and fraud charges against its former CEO Sam Bankman-Fried, is uncertain. Several institutions, including Silvergate Capital in La Jolla, California, held FTX deposits or did business with the exchange, which raises questions about whether the bank conducted sufficient due diligence. The turmoil may also raise the regulatory bar for banks that want to work with crypto firms or tempt them to end relationships with these companies altogether. On the other hand, banks that do stay involved with crypto companies may become more attractive to investors and these businesses because of their compliance infrastructure and reputation for safety.
