Metropolitan Commercial Bank is bringing an end to its cryptocurrency related services. Starting this month, the New York-based financial institution will end all relationships with its crypto clients and terminate its crypto debit card, payment and accounting services.
Metropolitan Bank Holding Group, the holding company for Metropolitan Commercial Bank (MCB), has announced that it will be fully exiting the crypto-asset related vertical. The decision was made by the New York-based corporation after a “careful review” of “recent developments in the crypto-asset industry” by its board of directors and management.
While making the announcement, MCB also assessed changes in the regulatory environment regarding the involvement of financial institutions in crypto-related businesses, and the case for further involvement of the bank in the crypto industry at a time of market turbulence. According to Mark R. DeFazio, President and CEO of the Metropolitan Bank, the company has been working on exiting the cryptocurrency related asset vertical since 2017 when it decided to pivot away from the sector and not expand the business. The President added that the banks’ crypto clients did not represent a “material portion” of the business and did not cause any financial risk to the firm.
MCB expects minimal financial impact from the exit as the bank currently has four active institutional crypto clients that represent for approximately 1.5% of its total revenues and 6% of total deposits. As per the company’s financial report from the third quarter of 2022, these numbers equate to around $1 million in revenue and $342 million in deposits.
The company says that its relationship to its crypto-related clients are limited to providing debit card, payment and account services. Metropolitan Bank confirmed that it has no outstanding loans to these clients, does not hold any of their crypto assets on its balance sheet and does not indulge in any activities that involve marketing or selling of cryptocurrencies to its customers. The bank has begun the process of closing its relationship with the clients and expects the process to be completed by the end of 2023. Furthermore, the process will not stop MCB’s existing customers’ from sending to or receiving funds from crypto service providers they wish to do business with. Customers that do not have crypto asset-related activity with the bank will not be affected by the decision.
Metropolitan Commercial Bank, which has about $6.4 billion worth of assets under management, became one of the first traditional financial institutions to provide cryptocurrency related services when it rolled out a crypto debit card in 2018.
The digital asset industry is at a tough crossroad with recent market events bringing dark clouds over the sector. The collapse of major institutions like crypto exchange FTX, lender Celsius Network and hedge fund Three Arrows Capital (3AC), has increased scrutiny from regulators over the cryptocurrency market. In the U.S, financial regulators including the Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB) and the Internal Revenue Service (IRS) are working on developing a framework to better regulate crypto assets. On January 3, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) released a joint statement referring to past problems caused by the under-regulated industry and how the government agencies are looking to maintain sound banking practises when it comes to traditional and digital financial assets.