MCB Shuts Down its Crypto Business

According to a press release from the bank, this decision was influenced by recent developments in the cryptocurrency industry and changes in the regulatory landscape regarding banks’ involvement in crypto-related businesses.

The cryptocurrency unit accounts for roughly 1.5% of MCB’s total revenues and 6% of its total deposits, so the financial impact of this move is expected to be minimal. MCB has already begun the process of closing out its relationships with crypto-related accounts and expects the process to be completed by 2023.

The bank currently has no loans outstanding to any of these clients and does not hold cryptocurrency assets on its balance sheet or facilitate the sale of cryptocurrency to its customer, per the announcement.

MCB emphasised that this development does not affect the ability of customers to transact with cryptocurrency companies or MCB’s service to customers who do not have crypto-related activity as a principal line of business. The bank’s decision to leave the cryptocurrency market shows how difficult and uncertain it has been for many financial institutions to deal with the fast-changing cryptocurrency market.

“Today’s announcement of our exit from the crypto-currency-related asset vertical represents the culmination of a process that began in 2017 when we decided to pivot away from crypto and not grow the business,” said Mark R. DeFazio, President, and CEO of MCB. “Crypto-related clients, assets, and deposits have never represented a material portion of the Company’s business and have never exposed the Company to material financial risks.”

US Authorities Could Go Ham on Financial Firms Dealing With Crypto

Following the downfall of FTX, financial authorities in the United States have increased their surveillance of businesses that are involved in the cryptocurrency market. This has prompted MCB to take the aforementioned action.

The Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB), and the Internal Revenue Service (IRS) have all said that they plan to put crypto legislation at the top of their agendas in 2023 and tighten their control over it.

The collapse of FTX and the ripple effects it caused have also put more pressure on crypto banking. Last week, Silvergate Bank, a California-based institution that caters to cryptocurrency firms, stated that it will be laying off 40% of its staff and holding a debt sale in order to remain operational.

(by Ibiam Wayas)