- The lender’s decision to off-board certain crypto hedge funds highlights challenges in accessing reliable banking services for crypto firms.
- Customers Bank has imposed a cap on deposits from crypto clients to mitigate risk.
Customers Bank has ended relationships with several crypto hedge funds, according to multiple sources cited by CoinDesk. This action highlights the ongoing challenges faced by crypto companies in accessing reliable banking services. Crypto banking continues to shift, signaling a cautious approach to managing risks in the volatile digital asset space.
Sources claim that Customers Bank’s latest decision targeted inactive accounts as part of routine housekeeping. The bank’s goal appears to be streamlining its client base rather than initiating a sweeping de-banking across the industry. Another source mentioned that numerous funds have already started searching for new banking partners, potentially in response to Customers Bank’s latest actions.
Customers Bank, known for servicing high-profile crypto entities like Galaxy Digital, Coinbase, and Circle, has also implemented a cap on deposits from crypto clients. This policy limits digital asset deposits to 15% of the bank’s total deposits, a measure intended to mitigate risk. At the end of the first quarter, the bank reported total deposits of approximately $18 billion, with $2 billion coming from its crypto-focused instant payment platform, CBIT.
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Capping Crypto Exposure
The current move by Customers Bank underscores the broader difficulties crypto companies face in securing stable banking relationships, especially following the collapse of Silvergate Bank and Signature Bank. Both institutions were pivotal in providing banking services to the crypto industry, and their absence has left a significant gap.
Customers Bank, based in West Reading, Pennsylvania, and owned by Customers Bancorp, exclusively deals in US dollars and refrains from accepting cryptocurrency deposits or extending loans for crypto activities. Despite this, it has carved out a niche with its CBIT platform, which facilitates 24/7 US dollar payments for digital asset firms.
As Customers Bank narrows its client base and enforces stricter caps on crypto-related deposits, hedge funds in the digital asset space are being compelled to seek alternative banking solutions. This trend highlights a growing need for crypto companies to find stable, reliable banking partners in an increasingly cautious and regulated financial environment.
The evolving policies of institutions like Customers Bank reflect a delicate balance between leveraging the lucrative opportunities within the crypto sector and mitigating the inherent risks. For now, crypto hedge funds must navigate these changes, continuously adapting to the shifting financial landscape.
