Metropolitan Commercial Bank is leaving the cryptocurrency space because of “recent developments.” The move comes amid an intense bear market that has rocked the crypto industry over the past year.
Metropolitan Commercial Bank pulls out of crypto
The Metropolitan Commercial Bank has become one of the latest banks in the United States to pull out of the cryptocurrency sector amid a series of negative events in the market. The parent company of the New York-based lending firm, Metropolitan Bank Holding (MCB), announced this development on January 9.
The parent company said that the decision came after a review by the bank’s Board of Directors and the management. The bank pointed to recent developments in the crypto sector, the changing regulatory framework over banks engaging in crypto services, and a strategic business case analysis of MCB’s further involvement in the sector.
The bank could be referring to the latest regulatory scrutiny that has befallen the crypto industry following the collapse of several crypto firms, such as FTX, in 2022. There are concerns that firms operating in the sector will be subject to strict regulatory scrutiny as regulators seek to prevent a similar situation as FTX.
The bank has also predicted that there will be a minimal financial impact on its exit from the cryptocurrency space. The bank has four clients in the crypto space who account for around 1.5% of its total revenues, equivalent to around $1 million. These clients also account for 6% of the bank’s total deposits, equivalent to around $342 million, according to the company’s Q3 2022 financial results released in October.
Silvergate’s bank Q4 2022 revenues slump
The recent bearish trend across the cryptocurrency market has seen banks offering cryptocurrency services report a notable slump in their financials. One of the banks in the US that has fully ventured into the digital asset industry is Silvergate Capital.
Silvergate Capital reported a worse-than-expected outflow in deposits during the fourth quarter. The financial impact of the outflows will have a significant effect on the long-term profitability of the company, according to a research report that JPMorgan released.
Because of the bearish trend across the crypto market and the effects of this on the bank’s financials, JPMorgan has downgraded its rating on the Silvergate stock. The stock has been downgraded from overweight to neutral, while the price target has been dropped from $30 to $14.
JPMorgan is not the only financial institution that has downgraded its rating on Silvergate. Bank of America also downgraded the stock’s rating to underperform. Canaccord Genuity, Morgan Stanley and Wells Fargo also dropped the stock’s price targets.
Moody’s, a rating agency, also downgraded Silvergate’s long-term deposit rating to Ba1, which is the junk status. The rating was attributed to the drop in crypto deposits, layoffs, and the losses realized as the bank rushed to meet its liquidity needs. Silvergate has significant exposure to the crypto sector.
FightOut (FGHT) – Newest Move to Earn Project
- CertiK audited & CoinSniper KYC Verified
- Early Stage Presale Live Now
- Earn Free Crypto & Meet Fitness Goals
- LBank Labs Project
- Partnered with Transak, Block Media
- Staking Rewards & Bonuses