Metropolitan Commercial Bank Closes Crypto Vertical, Emphasises it Has No Liabilities
US Metropolitan Bank Holding Corp., the parent company of the New York-based, $6.4 billion-asset-heavy Metropolitan Commercial Bank (MCB), said it would “fully exit the crypto-asset related vertical.”
Mark R. DeFazio, President and CEO of MCB, stated that this announcement “represents the culmination of a process that began in 2017, when we decided to pivot away from crypto and not grow the business.”
According to the press release, the decision to close the vertical was the result of “a careful review” by the Board of Directors and management in light of:
- the recent developments in the crypto industry,
- material changes in the regulatory environment regarding banks’ involvement in crypto-related businesses,
- and a strategic assessment of the business case for MCB’s further involvement.
This comes after, as reported, on January 3, three US regulators – the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) – issued a joint statement warning banks about crypto-related risks, prompted by the massive failures of several large crypto companies.
The “key risks” associated with the sector and its participants, per the statement, include scams and fraud, legal uncertainties, volatility, stablecoin runs, as well as risks related to decentralization, contagion, and lack of maturity and robustness in the space.
MCB’s announcement added, however, that,
“The Company expects minimal financial impact from the exit of this vertical.”
DeFazio commented that the company is focused on growing its core business, as well as “financial discipline and sound risk management.” He added that,
“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.”
The bank currently has four active institutional crypto-related clients – and these, in the aggregate, account for some 1.5% of total revenues and 6% of total deposits.
It went on to stress that the bank’s relationship with these specific concerns providing debit card, payment, and account services, stating:
“The Company has no loans outstanding to any of these clients, does not hold crypto-assets on its balance sheet and does not market or sell crypto-assets to its customers.”
Therefore, the bank will not continue doing business with its crypto-related clients and will start ending them “in an orderly fashion.” This process, it said, should be completed by the end of this year.
The announcement noted that the decision would not impact customers’ existing ability to either send funds to or receive funds from crypto companies they themselves choose to do business with.
Per an October announcement, the company had total assets of $6.4 billion as of September 30, 2022, a decrease of $445 million, or 6.5%, from June 30, and an increase of $280.8 million, or 4.6%, from September 30, 2021.
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Learn more:
– Top SEC Official Steps Down Following Controversial Meetings with Sam Bankman-Fried and FTX Lobbyists
– SEC’s Munter: Investors Should Proceed with Caution on Crypto Proof-of-Reserve Audits
– Crypto Lender Nexo to Leave the USA After Discussions with Regulators Hit a Stalemate
– US Senator Jon Tester Sees ‘No Reason’ Why Cryptocurrencies Should Exist – Regulation Coming?
