Metropolitan Bank Holding Corp, the parent company of Metropolitan Commercial Bank, has announced that it will leave the crypto asset space. The bank said that it made this decision after a review by the management and the Board of Directors.
Metropolitan Commercial Bank exits the crypto industry
Several negative events have happened in the crypto space in the past year. Most assets have lost around two-thirds of their value as the bear market intensifies. The recent collapse of FTX and the mid-2021 downfall of Celsius, Three Arrows Capital, and other crypto firms have painted a gloomy image of the industry.
In its official statement, Metropolitan Bank said that the “recent developments” in the crypto industry had influenced this decision. The bank further said it was concerned about the changing regulatory framework on the involvement of banks in the crypto business.
The CEO of Metropolitan Commercial Bank, Mark R. DeFazio, commented on this development, saying that the company has been pivoting away from crypto in recent years, adding that the business did not represent a significant share of the bank’s operations.
“We remain focused on growing our core business and delivering superior value for all our stakeholders through high-touch relationship-driven banking, supported by financial discipline and sound risk management,” DeFazio added.
The bank does not have any cryptocurrency assets on its balance sheet. Moreover, it does not have outstanding loan obligations with its crypto clients. The bank has four active crypto clients that account for around 1.5% of the bank’s total revenues and 6% of all the bank’s deposits.
Metropolitan Commercial Bank was among the first traditional banking institutions that entered the digital asset industry. One of the products launched by the bank is a crypto debit card launched in 2018. The company notes that its exit from the crypto industry will be completed during the year.
US regulators warn banks of crypto contagion risks
Earlier this month, US-based regulators warned banks of the high risk of fraud, inaccurate disclosures, and legal uncertainty surrounding crypto companies. The warning came weeks after the collapse of FTX, one of the largest cryptocurrency exchanges globally by trading volumes.
A joint statement released by the Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp said there were concerns over the safe and sound business practices of the banks that were increasingly being exposed to crypto.
The regulators said that the banks that issued and held crypto tokens were likely to be non-compliant with safe and sound banking practices. The concerns aired by these institutions could deal a blow to the banks trying to offer crypto services to their customers.
While these US regulators are advising banks against expanding their services into digital assets, they have failed to provide a clear regulatory framework. Institutional investors and banking institutions have been calling for crypto regulations amid increased demand for crypto services from clients.
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