Digital currency businesses’ deposits at Metropolitan Commercial Bank have declined for more than 12 months, which indicated an increased rivalry in an area where the bank once was one of the sole player in town.
According to an investor presentation published last week by the New York-based bank, its deposits from crypto firms dropped by 52 percent during 2018, to $104 million on Dec. 31. Digital currency customers accounted for 4 percent of the bank’s overall year-end deposits, down from 13 percent a year earlier.
It is worth noting that, Metropolitan is one of a few number of banks which has crypto-related operations. The bank still advertises a diverse array of global payment clients including Bitpay, Crypto.com, Coinbase, and Voyager.
Apparently, while that decline could partially be reflected in the demand for crypto bears in 2018-2019, it also indicates that the bank is facing tougher competition in a sector where most financial institutions have traditionally feared getting involved in.
For example, at Metropolitan’s rival Silvergate Bank, deposits of cryptocurrencies declined at a slower pace by 22 percent y-o-y only, to $1.29 billion as of Sept. 30, the latest date available for figures. The crypto clientele of La Jolla, Calif.-based bank, increased by 273 firms over the same 12-month period to 756 in total, accounting for 70 percent of its $1.8 billion.
Last year has witnessed the entry of a few players to the banking crypto business market, such as Massachusetts-based Provident Bank and Quontic in New York.
Christopher O’Connell, a bank stock analyst at investment firm Keefe, Bruyette & Woods said:
“Rather than fight to retain deposits, Metropolitan was likely content to let some of this business go.”
“Revenue from digital currency customers has steadily hovered around 1 percent of Metropolitan’s total ever since foreign exchange conversion and cash management fees from the sector spiked in Q4 2017 and Q1 2018.”, O’Connell added.