Metropolitan Commercial Bank has announced that it will be closing down its crypto business due to the regulatory environment.
Uncertainty for banks
The New York-based bank, which has been offering crypto services since 2015. The bank’s move to shut down its crypto operations comes at a time when the regulatory landscape for digital currencies is in flux.
Earlier this year, the Office of the Comptroller of the Currency (OCC) issued a statement clarifying that banks are allowed to provide custody services for cryptocurrencies. However, this guidance has not yet been implemented, leading to uncertainty for banks looking to enter the space.
Further uncertainty was fostered just recently, when the OCC made a joint statement with the Federal Reserve, and the FDIC, warning of the risks to banks of dealing with crypto companies.
MCB closes crypto business
In a statement, Metropolitan Commercial Bank said that it had:
“made the difficult decision to exit the cryptocurrency business due to the numerous regulatory hurdles and the evolving nature of the market.”
The bank added that it will continue to serve its existing crypto clients until they have had a chance to transition to other providers.
Mark DiFazio, President and Chief Executive of the bank, was quoted in an article on the subject by American Banker. He said:
“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,”
Also, according to the article, the bank only had four active crypto-related institutional clients, for whom the bank was providing “debit card, payment, and account services.” They were said to account for 1.5% of total revenue, and 6% of total deposits.
Challenges for banks looking to offer crypto services
The decision by Metropolitan Commercial Bank to close its crypto business is a reminder of the challenges facing banks looking to enter the digital currency space. While the OCC’s guidance has opened the door for banks to offer crypto services, the lack of clear regulations has made it difficult for these institutions to navigate the space. Until there is greater clarity on the regulatory front, it is likely that other banks will also be hesitant to enter the crypto market.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.