Today Metropolitan Commercial Bank announced that it plans to withdraw from servicing clients in the crypto-asset sector following a review by its board. It cited the drivers as the ‘recent developments’ in the crypto-asset sector, presumably including the crypto crash and bankruptcies such as FTX, as well as significant moves on the regulatory front. Crypto only represents a small part of Metropolitan’s business.
Metropolitan, with total client deposits of $5.7 billion at the end of Q3 2022, said that crypto-asset businesses represented 6% of deposits (around $350 million) and 1.5% of revenues with four institutional crypto-asset related clients.
Last week Silvergate, the bank most exposed to the crypto sector, reported that it effectively had a run on the bank in Q4, with digital asset customer deposits down around $8 billion or 68% during the quarter. As a result, it is cutting 40% of its staff, but the bank is liquid and still committed to the sector so far.
Turning to larger competitor Signature Bank, its digital asset clients represented deposits of $23.4 billion or 23% of its total as of November last year, and it plans to shrink that proportion.
Meanwhile, Metropolitan was keen to emphasize that it doesn’t make loans to these clients, hold any cryptocurrencies or market crypto to clients.
“Today’s announcement of our exit from the crypto-currency related asset vertical represents the culmination of a process that began in 2017, when we decided to pivot away from crypto and not grow the business,” said Mark R. DeFazio, President and CEO of MCB. “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.”
At the start of this year, the Federal Reserve, OCC and FDIC issued another joint warning to banks about the risks of the crypto-asset sector.
