One of America’s leading banks to offer its customers crypto trading services is about to end its digital assets exposure. Accordingly, the New York-based Metropolitan Bank Holding, the parent company of the Metropolitan Bank, has announced its decision to halt all crypto-related services.
Exiting the Crypto Space
In an announcement on Monday, the Metropolitan Commercial Bank (MCB) revealed that it is ending its crypto-based services due to the recent developments in the digital asset sector. The bank’s statement noted that the decision to stop offering crypto services to clients follows a detailed consideration by the board of directors and management, reflecting current developments in the crypto asset market.
In addition, the banking giant added that regulatory changes regarding banks’ interaction with cryptocurrency and the evaluation of MCB’s involvement in the industry all contributed to the decision. Meanwhile, keen industry observers believe the bank is referring to the ongoing contagion due to the FTX collapse last November.
Nevertheless, MCB said it anticipates a slight financial impact due to its recent action. It is worth noting that the Metropolitan Commercial Bank services only four crypto clients, who account for 1.5% of the bank’s revenue and 6% of deposits.
By revenue estimation, the figures reflect $1 million in revenue and deposits of $342 million based on MCB’s Q3 report for 2022. The latest development comes a week after the US Federal Reserve and banking regulatory bodies warned banks against their continued exposure to crypto assets.
With the FTX debacle adding more fuel to the fire in the crypto space and the current bearish trend, regulators are urging banks to reconsider their stance on dealing with digital financial assets.
Federal Reserve Urges Caution Toward Crypto
Meanwhile, the Federal Reserve recently warned banks to take a cautious approach in dealing with crypto assets in light of the current conditions in the crypto market. The recent failures of numerous large-scale crypto firms continued to be the reference point for regulators and the government in their bid to highlight the industry’s failings.
Moreover, the recent Fed statement includes that of the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). The regulators noted that issuing digital assets or holding them on balance sheets is not in line with existing safe banking practices.
The Fed, OCC, and FDIC disclosed that crypto assets and their related activities do not have the same safety and soundness associated with traditional financial models. According to the regulators, there is a need to resist crypto assets from having a solid grip on the traditional financial sector.
Strangely, the heads of all three regulatory agencies agreed with the sentiments of the Financial Stability Oversight Council, which regarded cryptocurrency as a danger to the financial system.
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