Metropolitan Commercial Bank shuts down crypto business

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The Metropolitan Commercial Bank is exiting the crypto business.

The $6.4 billion New York-based asset bank, a unit of Metropolitan Bank Holding Corp., made the announcement on Monday. The company said the decision was driven by recent developments in the crypto-asset industry and changes in the regulatory environment for banks.

“Crypto-related customers, assets, and deposits have never represented a significant portion of the company’s business and have never exposed the company to significant financial risk,” said Mark DeFazio, president and CEO of MCB, in a press release. He also said that the decision dates back to 2017, when MCB moved away from crypto.

The Metropolitan Commercial Bank, led by CEO and Chairman Mark DeFazio, says its current relationships with crypto companies account for 6% of total deposits at the bank.

According to the statement, MCB has four active institutional clients related to crypto-assets, to which the bank provides debit card, payment and account services. They represent about 1.5% of total income and 6% of total bank deposits. MCB expects to fully terminate these relationships in 2023.

The way forward for banks involved in cryptocurrency, following the collapse of cryptocurrency exchange firm FTX and fraud accusations against its former CEO Sam Bankman-Fried, is uncertain. Several institutions, including Silvergate Capital in La Jolla, Calif., held FTX deposits or did business with the exchange, raising questions about whether the bank performed sufficient due diligence. The turmoil may also raise the regulatory bar for banks that want to work with crypto companies or prompt them to end their relationship with those companies altogether. On the other hand, banks that remain involved with crypto companies may become more attractive to investors and such companies due to their compliance infrastructure and reputation for security.

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