Monday, January 30, 2023
  • Metropolitan Bank announced that it intends to end all crypto-related services due to the long-standing effects of the crypto winter
  • The Metropolitan Commercial Bank is one of the first banks to offer crypto services
  • During the first quarter as a bank offering crypto services, it made over $3.4 million by transacting cash management and foreign exchange fees for cryptocurrency clients.

Crypto investors have suffered severely due to the ongoing effects of the crypto winter. The aftermath of the FTX crash has even found its way to crypto partnerships. It is causing many organizations to shut down their crypto services. In recent news, the Metropolitan Bank, one of the few banking systems to offer crypto services, decided to call it quits. The Heads of the Commercial Bank have decided that the digital industry is too hot for it to handle.

As many might view it as a rush decision, it is based on the consistent driving value of cryptocurrency. However, this is still a substantial blow to the digital asset industry. It may cause a ripple effect, igniting a chain of undesired cancellations of other crypto partnerships. 

The history behind Metropolitan Bank and Crypto

When crypto first debuted and its concept was proven legitimate, many saw it as the end of all centralized financial services. In truth, it genuinely was; Nakamoto created crypto to remove the authoritative power banking systems have. Its primary objective was to create a universal financial product that would not monopolize the concept of the “Bank”. Instead, it would give the masses a way for everyone to gain full contol over their finances. In addition, it removes the tedious processes that banking systems have.

Also, Read Crypto Winter into an ice Age in 2023.

For a time, this was the thought process of many banks. The feud between the digital industry and the traditional finance system continuously grew as more crypto investors emerged. However, this was only the thought process of some banking systems. The Metropolitan Commercial Bank is one of the first banks offering crypto services. They saw that competition could have been more profitable.

Crypto Winter

Metropolitan Bank, one of the few banks offering crypto services, feels the effects of the crypto winter, and the FTX crash aftermath made things worse as value dropped and crypto investors left.[Photo/Crain]

Many consider Metropolitan Bank a pioneer in offering and facilitating crypto services. According to Nick Rosenberg of New York financial Institution’s Chief technology officer, a bank offering crypt service is nothing short of a game changer. He stated that crypt investors have grown over the years, and now the industry is to be taken seriously. Smart individuals have opted to collaborate with its growing potential rather than fight it. Its new technology also offers an ocean of possibilities that would inevitably change how people view business.

Metropolitan Bank stands out not just as a bank offering crypto services but as an institution that has taken the initiative to incorporate crypto in its daily business. The Bank contained various clients, from individual crypto investors to a few exchanges and hedge funds. Even though Metropolitan only dealt with the fiat currency, its openness to work with other crypto-affiliated entities made it stand out.

During the first quarter as a bank offering crypto services, it made over $3.4 million by transacting cash management and foreign exchange fees for cryptocurrency clients. According to a Securities and Exchange Commission filing, this totalled more than a 300% increase in an entire year.

Also, Read Africa’s crypto ecosystem affected by FTX collapse.

This triple growth rate was astronomical for the banking industry, where non-interest income for all institutes climbed a measly 7.9% during the same period. Due to it being a one-of-a-kind bank offering crypto services, it gathered much attention during the first few years. Unfortunately, the effects of the crypto winter gradually reduced the pace of growth. Finally, the FTX crash aftermath sealed the deal.

The Metropolitan Bank is calling it quits.

The FTX crash aftermath resulted in millions of crypto investors pulling out of the digital asset industry. Crypto volatility works in the principle of supply and demand. The demand for crypto significantly reduced while its supply exponentially increased. This resulted in one of the worst crypto winters ever recorded, and no entity felt its effects work like banks offering crypto services. Metropolitan Bank announced that it intends to end all crypto-related services due to the long-standing effects of the crypto winter.

One of the few parent banks openly serving the crypto industry was suffering huge losses from its crypto-related services.

Also, Read Upcoming crypto winter: How will it affect Africa’s crypto ecosystem.

The Bank stated that the decision follows a careful review by the Board of Directors and management and reflects the recent development of the crypto industry. There are various regulation changes regarding banks offering crypto services, and they made tough decisions to ensure business continuation.

The Bank stated that despite its open relations with crypto, the time to exit and part ways has come. In addition, exiting the crypto industry will have a minimal financial impact on their other services showing just how far the effects of the crypto winter have reduced the value of crypto. Its total crypto clients accounted for only 1.5 % of its total revenues and 6% of its deposit. These figures account for at least $1 million in revenue and $342 million in deposits.

Wrapping up

Undoubtedly, the FTX aftermath has caused considerable damage to the crypto ecosystem. Many organizations today are pushing for blockchain technology incorporation rather than crypto services. The low value of digital assets genuinely sets no value in their companies, and thus they see no need for it. With Metropolitan Bank closing its doors on crypto, one cannot help but wonder if this will be the likely trend for crypto in 2023.

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