Metropolitan Commercial Bank has departed from the cryptocurrency market, citing regulatory changes and industry developments as driving factors. Despite the bank’s previous involvement in the crypto sector, the company maintains that this decision will have minimal financial consequences.
Metropolitan Commercial Bank’s Decision Explained
The bank’s decision to exit the cryptocurrency market comes after a strategic assessment of its business case and recent developments in the industry, including regulatory policy changes. The current SEC chair, Gary Gensler, has been vocal about his concerns regarding cryptocurrency, which could have influenced Metropolitan’s choice to withdraw from the market.
By the end of March, the bank’s digital asset-related deposits had dropped to 4%, amounting to $217.6 million. As a result, the bank has started closing down its relationships with four crypto-asset-related clients, expecting to complete this process in 2023. Significantly, this decision will not impact customers’ ability to send or receive funds from crypto-asset firms.
According to Metropolitan, the move away from the cryptocurrency market will have minimal financial repercussions. In January, Metropolitan Bank Holding (MBH), the parent company, had already announced the discontinuation of crypto-related services, attributing the decision to industry developments and regulatory pressure.
Despite the bank’s departure from the cryptocurrency sector, its core business remains strong. As of March 31, Metropolitan’s core deposits totaled $4.9 billion, marking an increase of $69.2 million from December 31, 2022. The bank also reported a net income of $25.1 million for the first quarter of 2023, a 31.8% YoY increase, and revenues of $65.5 million for the same period, reflecting a YoY growth of 21.2%.
The Broader Impact on the Crypto Industry
The loss of Metropolitan Commercial Bank’s involvement in the cryptocurrency industry is significant, as the bank serves a diverse clientele, including small, middle-market, and corporate businesses, as well as municipal clients and high-net-worth individuals. In addition, the bank’s global payments group also functions as a banking-as-a-service provider for various fintech, payments, and money services firms in the US and internationally.
This decision follows recent upheavals in the banking sector, with Signature Bank and Silvergate – both previously heavily involved in the crypto sector – facing collapse. While the extent of crypto’s role in their downfall is debated, many argue that the influence of cryptocurrency has been greatly exaggerated.
Metropolitan Commercial Bank’s decision to exit the cryptocurrency market marks a notable shift in the banking industry’s relationship with digital assets. The bank’s withdrawal is a loss for the crypto sector but is expected to have a minimal financial impact on Metropolitan itself.
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