Metropolitan Bank Is Handling Millions for Crypto Clients

While most banks cling to the adage "Blockchain not bitcoin," Metropolitan stands out simply by being one of the very few to enthusiastically court deposit business from crypto firms.

These clients include a few exchanges, as well as hedge funds and other crypto investors that bank at Metropolitan because it's easier to quickly move their money to those exchanges.

In the first quarter, cash management and foreign exchange conversion fees from cryptocurrency clients totaled $3.4 million, the bank disclosed in an investor presentation.

What's more, that triple-digit rate of growth is astronomical for the U.S. banking industry, where non-interest income for all institutions climbed a measly 7.9 percent during the same period, according to data from the Federal Deposit Insurance Corp. Yet despite the lucrative demand from crypto companies for banks to provide fiat liquidity and other traditional services, bitcoin-friendly banks like Metropolitan are still as rare as they were three years ago.

One reason Metropolitan Bank is an outlier in embracing the crypto industry is that most banks can't stomach the risks.

While public blockchains can help banks and law enforcement trace the movement of money, the pseudonymous nature of crypto addresses makes it hard to determine who is ultimately sending and receiving funds.

As bullish as they may be, Metropolitan's bankers still recognize the risks of working with crypto clients.

Setting aside the fee income and interest-free funding on deposits, there's a more intangible benefit Metropolitan gains from banking cryptocurrency firms, one that arguably compensates for all the risks.

The bank's director of new products, Kyle Hingher, said Metropolitan hopes to someday be one of the leading banks serving the emerging token economy, once the opaque regulatory landscape clears up.

Looking ahead, the Metropolitan banker is keeping close tabs on the emergence of security tokens and blockchain-based settlement systems.