The Metropolitan Bank Holding Corp.group leader of Metropolitan Commercial Bank (MCB), headquartered in New York and with assets of $6.4 billion, has announced that it will retire from the cryptocurrency sector.
Mark R. DeFazioChairman and CEO of MCB, said the move “represents the culmination of a process that began in 2017, when we decided to move away from cryptocurrencies and not grow the business.”
According to the press release, this decision is the result of “careful consideration” by the board of directors and management in light of:
- recent developments in the cryptocurrency industry,
- significant changes in the regulatory environment regarding the involvement of banks in crypto business,
- and a strategic evaluation of the business case for MCB’s future involvement.
MCB’s announcement comes shortly after a joint statement from three US regulators: the Federal reservethe Federal Deposit Insurance Company (FDIC) and theOffice of the Comptroller of the Currency (OCC) – January 3rd. In it, they warned banks of the risks associated with cryptocurrencies, following the bankruptcies of several major cryptocurrency companies.
The “key risks” associated with the industry and its participants, according to the statement, include scams and fraud, legal uncertainties, volatility, risk of “bank run” for stablecoins, as well as the risks associated with decentralization, contagion, and lack of maturity and robustness in the space.
MCB’s announcement states, however, that,
“The financial impact of this decision on the company will be minimal.”
DeFazio commented that the company is focused on growing its core business, coupled with “financial discipline and robust risk management.” He added that,
“Cryptocurrency-related customers, assets and deposits have never represented a significant part of the company’s business and have never exposed it to significant financial risk.”
The bank currently has four active institutional crypto clients, and these, taken together, account for approximately 1.5% of total revenue and 6% of total deposits.
He went on to point out that the bank’s relationship with these specific customers relates to the provision of debit card, payment and account services, stating:
“The company has no outstanding loans with any of these clients, does not hold any crypto-assets on its balance sheet, and does not trade or sell crypto-assets to its clients.”
Thus, the bank will conclude its business with its customers “in an orderly manner”. This process, he said, should be completed by the end of the year.
The statement clarified that the decision will not affect customers’ current ability to send or receive funds from crypto firms they themselves choose to do business with.
According to an October announcement, the company’s assets were $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%, compared to September 30, 2021.
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