New York-based bank exits crypto after tumultuous year
The last year proved to be another turbulent year for the crypto industry. From a lasting market downturn and exploits in decentralized finance (DeFi) to the FTX scandal, no area was left unscathed.
For some, the happenings in the space proved unsustainable for business. The Metropolitan Bank Holding Corp, the holding company for New York-based Metropolitan Commercial Bank (MCB), announced it is completely exiting its crypto-assets vertical.
In its statement, the corporation said its decision “reflects recent developments in the crypto-asset industry,” along with changes in the regulatory landscape in regard to banks’ involvement in crypto-asset-related businesses.
According to MCB, the process has been ongoing since 2017, and it expects little financial impact. It currently has four active institutional crypto-asset-related clients, which account for around 1.5% of total revenues and 6% of total deposits.
This development comes alongside the ongoing proceedings from the FTX case that have kept the spotlight on the crypto industry.
Experts forecast increased scrutiny from regulators in the United States towards the space in the upcoming year. Especially as the Securities and Exchange Commission, Financial Accounting Standards Board and Internal Revenue Service are seeking to up crypto regulations and oversight.
Related: What is institutional DeFi, and how can banks benefit?
On Jan. 3, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) released a joint statement regarding crypto assets in light of the 2022 chaos. It also highlighted their commitment to grounded banking practices.
In addition to the oversight on FTX, Binance is also being probed for money laundering in U.S. courts. This has brought further examinations as to the relationships of hedge funds with the crypto exchange.
Despite the industry scrutiny, some industry insiders have high hopes for DeFi in this upcoming year.