Metropolitan Commercial Bank announced on Monday that it will no longer work with cryptocurrencies anymore. You might already know why.
New Your City’s Metropolitan is one of the few U.S. banks that officially offer crypto services to its clients. With a humble market capitalization of $640.82 million, it still falls into the ranking of the largest banks and bank holding companies and gets an honourable 343rd place. This did not prevent it from becoming one of the first traditional financial institutions to go into the nascent crypto realm. One of the products they offered to their clients was a cryptocurrency debit card launched in 2018.
On Monday the company announced that they have made a decision to exit the crypto-asset related vertical due to "recent developments" in the digital asset industry. Who is to blame? Three words, nine letters: fall of FTX. This has actually spooked the market and businesses now expect not only financial but also regulatory complexity.
"This decision follows a careful review by the Board of Directors and management and reflects recent developments in the crypto-asset industry, material changes in the regulatory environment regarding banks’ involvement in crypto-asset related businesses, and a strategic assessment of the business case for MCB’s further involvement at this time,” – Greg Sigrist, EVP & Chief Financial Officer of Metropolitan Commercial Bank.
The expected financial impact is assessed as minimal. According to the company, they do not hold any crypto-assets on their balance sheet. The company had only four active institutional crypto-asset related clients. Their share was less than 2% of its total revenues ($1 million, based on the Q3 2022 results) and they accounted for about 6% of deposits (about $342 million, based on the Q3 2022 results).
“Today’s announcement of our exit from the crypto-currency related asset vertical represents the culmination of a process that began in 2017, when we decided to pivot away from crypto and not grow the business. Crypto-related clients, assets and deposits have never represented a material portion of the Company’s business and have never exposed the Company to material financial risks. We remain focused on growing our core business and delivering superior value for all of our stakeholders through high-touch, relationship-driven banking, supported by financial discipline and sound risk management.” – Mark R. DeFazio, President and CEO of Metropolitan Commercial Bank.
MCB did the same as the largest Canadian pension fund that had cut ties with crypto a month earlier, rejecting the idea of rushing into the new area without adequate research, especially amid the turbulence in the crypto market.
Do you think it is the start of attrition? Are weak players leaving for stronger companies to emerge?