New Banks Enter the Crypto Market Offering Services to Different Companies in the Space
In general large banking institutions and players have remained far from the cryptocurrency market. These institutions tend to believe virtual currencies are a threat to their reputation and business. However, there are other banks, perhaps those smaller ones, that are offering services to companies working with virtual currencies.
According to Finance Magnates, these are some of the companies that are currently offering services to crypto companies: Metropolitan Bank, Silvergate Bank, Cross River Bank, and Signature Bank.
It is possible to see that the financial results shared by these banks are showing that the crypto industry has a lot to offer rather than just being small lenders. Although the market has been in a bear trend this year, there are several U.S. SEC-reporting banks that registered one of their best years.
Finance Magnates puts the example of Metropolitan Bank and Silvergate Bank. The Metropolitan Bank, which was founded back in 1999, is headquartered in New York and it is a community-focused bank. It has helped investors such as hedge funds and family offices to invest in crypto through crypto exchanges.
Apparently, the crypto market is very lucrative for Metropolitan. Nevertheless, these banks that work with virtual currencies do not handle them physically. Instead, they deal indirectly with them.
There are some interesting points marked by Finance Magnates. Cash management and FX conversion fees from these crypto-related clients were $3.4 million during the first quarter of 2018. Between January and September, non-interest income doubled to $10 million.
There are other financial metrics that show how this market is growing for several banks and financial institutions.
Silvergate Bank is also an example similar to the Metropolitan Bank. This institution is located in San Diego and it shows how small lenders become very active in the crypto space. This bank has opened around 500 accounts for cryptocurrency-related companies. There are some recognized firms working with the bank including Coinbase, Pazos, bitFlyer, Gemini and Kraken.
Silvergate’s largest depositors accounted $1.1 billion in deposits. At the same time, the non-interest income reached $5.6 million from the beginning of the year until September.
However, the institution knows that the crypto market is cyclical and it could have an impact on the business at any moment. If there is a very hard drop in the market, the number of clients could drop and existing customers could not be so interested as before in the market.
Despite this, the bank was able to overcome the bear trend in the crypto space in a very good way. Several Initial Coin Offerings (ICOs) and other similar projects related to the crypto space were not able to keep their operations.
Bitcoin (BTC) has also lost more than 80% of its value since its all-time high registered more than a year ago in December. Other virtual currencies lost more than 95% of their value.
Silvergate’s clients behaved in a different way than the whole market. They decided to increase their deposits around $237.7 million. 21% more than a year ago. Most of the funds came from new accounts.
As mentioned before, other banks such as Cross River Bank are also providing services to hundreds of crypto-related companies.
In Europe, other financial institutions are following the same path as the banks in the United States. Falcon and Vontobel in Switzerland or Fidor in Germany are offering services to those interested in virtual currencies.