Metropolitan Bank, a commercial bank based in New York, has revealed that more than 15 percent of the bank’s deposits are made by cryptocurrency investors and clients, and that the bank is willing to continue its support for digital asset traders.
In an interview with Leigh Cuen of Coindesk, Metropolitan Bank CTO Nick Rosenberg 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.”
Not Possible to Dismiss the Cryptocurrency Market
Previously, in regions like the US, Japan, and South Korea, which have become major cryptocurrency markets, banks have dismissed digital asset investors and businesses supporting digital assets due to their inaccurate assessment of the industry and the sheer size of capital available in the global cryptocurrency market.
Similar to how Rosenberg admitted that the bank only recently learned the cryptocurrency market is a serious industry, banks in South Korea and Japan were dismissive of the cryptocurrency industry up until mid-2017.
But, recognizing the rapid growth rate of digital asset exchanges and the market as a whole, and the entrance of the world’s biggest financial institutions such as Goldman Sachs and JPMorgan, it has become significantly harder for commercial banks to dismiss the cryptocurrency market and be left behind.
In South Korea for instance, Kookmin Bank, the country’s biggest bank, outright banned cryptocurrency businesses and stopped providing virtual bank accounts to cryptocurrency exchanges in December, 2017. The surprising move of Kookmin Bank led investors to worry about the short-term future of the market and ponder about the faith of cryptocurrency exchanges.
Almost immediately after Kookmin Bank declared its end of support for digital asset businesses, Shinhan Bank, the second largest commercial bank in South Korea, started to support digital asset exchanges, providing virtual bank accounts and other systems that businesses may need to operate seamlessly.
Joe Ciccolo, the president of compliance service provider BitAML, said that banks like Metropolitan Bank of the US and Shinhan Bank of South Korea which are willing to support digital asset exchanges are corporations that are able to take the compliance risks involved in dealing with an emerging and exponentially growing industry.
“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,” Ciccolo said.
In May, Bloomberg reported that Xapo, a secure Bitcoin wallet and vault platform, has more than $10 billion in deposits from Bitcoin investors, which surpass the deposits individual investors and businesses have made to 98 percent of the 5,670 banks in the US.
Major commercial banks are aware that digital asset investors need places to store billions of dollars in a safe manner, and entering the cryptocurrency market during a period in which most financial institutions are sitting on the sidelines could give early mover advantage to banks that move first.