Metropolitan Bank (NASDAQ: MCB) is exiting the digital asset industry, blaming “recent developments” in the sector.
The New York-based regional lender recently announced that it would be fully exiting the digital asset-related vertical after a careful review by its management.
The exit “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,” the bank stated.
Metropolitan’s announcement comes at a time when legacy financial institutions are rethinking their ties to digital asset firms following the FTX collapse. The exchange’s collapse is expected to attract regulatory crackdown on the industry, and banks are not waiting around to see what a post-FTX regulatory regime will look like.
Metropolitan claimed that the exit from the crypto industry would have minimal impact on its business. The bank says it only has four institutional clients dealing in digital assets who collectively only account for 1.5% of total revenues and 6% of deposits. In addition, the bank claimed that its relationships with these clients were limited to providing debit card, payment, and account services.
“The Company has no loans outstanding to any of these clients, does not hold crypto-assets on its balance sheet, and does not market or sell crypto-assets to its customers,” the New York State chartered bank stated.
Mark DeFazio, president and CEO of Metropolitan Bank, pointed out that while the exit comes against the backdrop of a ‘crypto contagion,’ the bank has been working on pivoting from the industry for five years now.
“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,” DeFazio commented.
The announcement comes as Silvergate Capital (NASDAQ: SI), one of the pioneer digital asset-focused banks, announced that the FTX contagion had spooked investors who had withdrawn over $8 billion in Q4. Silvergate also announced it would lay off 40% of its workforce as its shares tanked 46%, despite assuring investors that it had no direct exposure to FTX.
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