- 19th June 2018
- Posted by: emy
- Category: Cryptocurrency
Most U.S. banks don’t want customers with crypto, but New York’s Metropolitan Bank is actively looking for more crypto customers who it calls “pioneers.”
Nick Rosenberg, the bank’s CTO says: “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.”
And while many banks repeat the “blockchain not Bitcoin” mantra, Metropolitan is seeking deposits from crypto companies. 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.
To date, this has produced good business results for Metropolitan. According to a bank presentation, in the first quarter of 2018, cash management and foreign exchange conversion fees from cryptocurrency clients totalled $3.4 million. This helped deliver a 300 percent plus increase over the previous year for Metropolitan’s total non-interest income, to $5.4 million. Although that may sound like small change to the guys at JP organ, it must be remembered that Metropolitan is a community bank with just $1.9 billion in total assets.
Despite the crypto companies’ demand for banks to provide fiat liquidity, crypto-friendly banks like Metropolitan are still as rare as they were three years ago. Joe Ciccolo, president of the compliance service provider BitAML Inc. said: “It’s extremely challenging,” and added, “The legalized cannabis industry is having a much easier time than our cryptocurrency clients.”
Ciccolo also highlighted the fact that most banks can’t stomach the risks with crypto and the high turnover in compliance officers within the sector, saying, “It’s very difficult for a bank to maintain a pro-bitcoin stance. 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.” But it’s a problem when change comes down to one person.
Rosenberg at Metropolitan is aware of the risks, but has a two-pronged strategy for handling them. The first is being extremely selective about client acquisition, and only working with companies that take compliance as seriously as the bank does. The second is maintaining an open dialogue with regulators. It also insulates itself from the market volatility by only working with fiat money and never touching cryptocurrencies directly.
But Metropolitan also benefits in other less tangible ways by pursuing crypto clients – it gets a front-row seat to the revolution and is learning about how cryptocurrencies perform in the current environment.