Customers Bancorp Inc. has become a significant ally for the cryptocurrency industry.
The Pennsylvania-based bank has partnered with numerous digital asset firms, including major exchanges, market makers, and stablecoin issuers.
This surge in clientele occurred after the collapse of crypto-friendly lenders Silvergate Capital Corp. and Signature Bank.
Customers Bank has become one of the few remaining facilitators of dollar transactions for crypto businesses, Bloomberg reported.
Customers Bank from left; Jay Sidhu, chairman, president, and CEO for Customers Bancorp, Inc.; Richard Ehst, president and chief operating officer; Timothy Romig, executive vice president, group director of Pennsylvania and New Jersey; and Bob Wahlman, chief financial officer and executive vice president. (NATALIE KOLB/MEDIANEWS GROUP/READING EAGLE/GETTY IMAGES)
Despite being the 81st-largest U.S. bank by assets, Customers Bank now finds itself at the forefront of an industry that is under regulatory scrutiny and largely avoided by mainstream lenders.
This is a stark contrast to two years ago when Bitcoin (CRYPTO: BTC) was at an all-time high and investors were eagerly entering the market.
At that time, Customers Bank CEO Sam Sidhu was vocal about the bank’s crypto aspirations.
However, the bank is now capping crypto-related deposits and Sidhu emphasizes that these assets are just a small part of a broader plan to expand the bank’s payments business.
Customers Bank operates a payments platform that allows crypto clients to move dollars with the same immediacy as crypto, 24/7.
The bank’s appeal to crypto businesses increased when it avoided the industry’s biggest crisis of the past year: the collapse of Sam Bankman-Fried’s FTX (CRYPTO: FTT) exchange.As a result, Customers Bank saw an influx of new clients looking to open replacement accounts.
Customers Bank has decided to limit deposits on its Instant Token real-time payments platform, which caters to crypto clients, to no more than 15% of its total.
Despite this, the bank continues to do business with some of the industry’s biggest names, includingCircle Internet Financial (CRYPTO: USDC), Coinbase Global Inc. (NASDAQ: COIN), Paxos Trust Co., GSR, Anchorage Digital and BitGo.
Customers Bank’s increased involvement in the crypto sector could attract additional regulatory attention.
However, the bank believes it has measures in place to manage risk, such as holding deposits in US currency and spreading large deposits among multiple banks to maximize Federal Deposit Insurance Corp. coverage.
Despite Customers Bank’s efforts, the crypto industry’s banking problem persists, especially for less established players.
The industry is hoping for more alternatives and more traditional banks that support crypto players.
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