Luckily, Coinbase still has Silvergate and Cross River Bank.
Fortune reports that commercial bank Metropolitan Bank has ceased all international wire transfers involving cryptocurrencies. According to Fortune’s source, the sudden standstill was allegedly triggered by a potential case of international fraud by a client. The bank decided to freeze such transactions because they could not verify the compliance of international wire transfers for cryptocurrency accounts.
This is concerning as Metropolitan has been seen as a go-to service for cryptocurrency-related funds, backboning operations for leading cryptocurrency platform Coinbase, including deposits, wire transfers, and its Shift bitcoin debit card. Luckily, Coinbase banks with three: Silvergate and Cross River Bank, apart from Metropolitan.
But while Coinbase remains unfazed, other cryptocurrency companies may not be as lucky. Because Metropolitan Bank positioned itself as a cryptocurrency-friendly bank—“the Bitcoin bank,” as some even put it, there’s a big chunk of cryptocurrency-tied funds from organizations that are now stuck in the bank and can’t get out until they lift the freeze—if they ever do.
The possible consequences of this freeze on Metropolitan Bank, however, may not be as miniscule. Starting out as a small bank, Metropolitan experienced magnitudes of growth due to its connection to the rapidly growing crypto trade. Whether this freeze will drag them back down is yet to be seen, as it could very well be temporary until they iron out the compliance and fraud issues.
As of now, there is no official statement from Metropolitan Bank about whether the halt is temporary, and how long it will go on if it is. Reports of a looming international regulatory framework on identity associated with cryptocurrencies are also circulating. Last week, the US Secretary of Treasury Steven Mnuchin issued statements breathing life into the issue, saying he will be working with 20 nations to ensure that cryptocurrencies will not be used by “bad people” to do “bad things.”