Metropolitan Bank is one of the most cryptocurrency-friendly banks in the industry today. According to a new report from Coindesk.com, Metropolitan Bank believes cryptocurrency businesses are “pioneers”. The bank already handles millions for cryptocurrency users – and now they want to expand even further.
Coindesk interviewed the New York-based bank’s chief technology officer Nick Rosenberg, who said,
“We’re certainly very interested in growing this vertical. We’ve learned that it’s a serious industry. there are some very smart people involved. There are some very interesting ideas coming out that could really change the way people do business.”
Instead of seeing cryptocurrency businesses and users as pariahs – like most other banks – Metropolitan Bank has taken a different approach by embracing crypto users as pioneers.
Sure, you can find plenty of examples of other banks implementing blockchain technology – or at least researching blockchain. Metropolitan, however, is one of the few major banks courting cryptocurrency users enthusiastically.
Metropolitan Bank’s Customers Include Major Exchanges And Hedge Funds
Metropolitan Bank is reportedly handling accounts for several prominent businesses within the financial space and the crypto community.
“These clients include a few exchanges, as well as hedge funds and other crypto investors that bank at Metropolitan because it’s easier to quickly move their money to those exchanges,”
It’s important to note that Metropolitan only handles fiat currency for customers: they don’t handle any cryptocurrency whatsoever.
Crypto Has Proven A Lucrative Niche For Metropolitan
Metropolitan has found cryptocurrency to be a lucrative niche. As one of the few banks to accept crypto-related businesses, Metropolitan’s business has surged.
Cash management and foreign exchange conversion fees from cryptocurrency clients in the first quarter totaled $3.4 million, for example, according to an investor presentation found by CoinDesk.
Metropolitan’s crypto business also helped drive a 300% increase from a year earlier in Metropolitan’s total non-interest income, to $5.4 million, according to a filing with the SEC.
None of these figures are particularly mind-blowing. However, it’s important to note that Metropolitan is a community bank. The New York bank has just $1.9 billion in total assets, making it one-1,000th the size of JPMorgan.
The total value of the business might not be impressive, but the growth rates are impressive. Triple digit growth – like the 300% increase experienced by Metropolitan – is rare in the US banking industry. To put a 300% increase in non-interest income in perspective, the average growth for all banking institutions in the United States during the same period was just 7.9%.
Working With Crypto-Related Businesses Continues To Be Risky
Metropolitan Bank might look like a good success story for the crypto industry. However, crypto-friendly banks remain as rare as ever.
There are still enormous risks for a bank that chooses to take on crypto-related businesses and clients.
CoinDesk interviewed Joe Ciccolo, president of compliance service provider BitAML, Inc., who said,
“The legalized cannabis industry are having a much easier time than our cryptocurrency clients.” “It’s very difficult for a bank to maintain a pro-bitcoin stance,”
One of the best pieces of evidence to support that claim is the high turnover among compliance officers.
“If you have a new officer come into a financial institution, they may take the opportunity to put a different stance on high-risk customers such as crypto companies.”
Metropolitan and other crypto-friendly banks are exposing themselves to risk by accepting crypto clients. Banks require extra diligence to avoid criminal activity, for example. Banks like Metropolitan do this primarily by accepting an exclusive list of clients. Metropolitan and other banks also maintain an active, open dialogue with regulators to ensure they stay up-to-date.
Ultimately, cryptocurrency might one day lead to the demise of the banking system. Are crypto-friendly banks being smart by accepting crypto today? Or are they digging their own grave? For now, Metropolitan Bank’s business is surging due to its crypto-friendly regulations – but other banks have not yet followed suit.