Customers Bank, known for its crypto-friendly services, has ceased providing banking services to certain hedge-fund clients.
What Happened: While the bank revealed halting services, the extent of the off-boarding remains unclear. CoinDesk reported on Friday, citing three people familiar with the matter, that "a load of funds” were affected. The move targeted inactive accounts rather than a broad industry-wide action and several funds are now seeking new banking providers.
The West Reading, Pennsylvania-based company, owned by Customers Bancorp (NYSE:CUBI), offers a real-time blockchain-based payments platform, Customer Bank Instant Token (CBIT), facilitating 24/7 U.S. dollar payments for its crypto clients. The bank has a 15% cap on deposits in the CBIT vertical to limit its crypto exposure.
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Why It Matters: This situation underscores the ongoing challenges crypto companies face in accessing the U.S. dollar banking system, especially after the collapse of Silvergate Bank and Signature Bank last year.
In March 2023, Silvergate Bank announced its voluntary liquidation, citing regulatory challenges and a decline in deposits. This was followed by the failure of Signature Bank in the same month, which was taken over by the FDIC.
With the exit of these banks, crypto firms have been scrambling to find new banking partners. The recent move by Customers Bank to limit its exposure to the crypto sector further narrows the options available to these companies.
What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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