coindesk.com
Customers Bank has debanked a number of crypto hedge funds in recent weeks, three people said.
One person said the move was mainly housekeeping and the offboarding of inactive accounts.
To limit its exposure to digital assets the bank has capped deposits from crypto clients at 15% of total deposits.
Customers Bank, which services some of the largest names in crypto including Galaxy Digital (GLXY), Coinbase (COIN) and Circle, has told some hedge-fund clients it can no longer provide them with banking services, according to three people familiar with the matter.
Whilst the extent of the cull is unclear, one person said "a load of funds" were involved. A second person said the action represented the offboarding of inactive accounts rather than the widespread debanking of the industry. A third person said their digital assets financial services firm had spoken to a number of funds looking for new providers in recent weeks, potentially as a result of the offboarding of accounts at Customers.
This latest development highlights the difficulty that some crypto companies have in accessing the U.S. dollar banking system in the aftermath of the collapse of Silvergate Bank and Signature Bank last year.
The West Reading, Pennsylvania-based company, which is owned by Customers Bancorp (CUBI), deals only in U.S. dollars and does not accept cryptocurrency or make loans to support crypto activities. It offers its clients, estimated at well over a hundred digital asset firms, a real-time blockchain-based payments platform called Customer Bank Instant Token (CBIT) that allows crypto clients to make U.S. dollar payments 24/7.
A spokesperson for Customers Bank declined to comment on the policy, saying only that the bank was choosy as to who it took on as a client. To limit its exposure to crypto, the bank has capped deposits in CBIT, which delivers almost instant settlement and does not charge any fees.
“We have previously discussed publicly our 15% cap on deposits in the CBIT vertical," the spokesperson said. "As a result of that policy limitation, we are understandably selective with respect to new business. In each of the industries that we serve, we perform extensive due diligence and seek to onboard only high-caliber clients. The digital assets industry is no exception.”
Total deposits at the end of the first quarter were about $18 billion, with CBIT contributing around $2 billion.