According to an investor report submitted by the bank last week, New York-based Metropolitan cryptocurrency deposits declined by 2018% in 52 to $ 104 million on December 31 last year.
Customers with a digital currency business accounted for 4% of the bank's total deposits at year-end, down from 13% the previous year. Metropolitan is one of the few banks that openly offers services in the sector.
In the report, the bank also advertises a diverse set of services, including the Bitpay crypto payment processor, the Crypto.com cryptocurrency platform, the Coinbase cryptocurrency exchange and the Voyager crypto broker. Despite this, the bank's success is far from its peak in the second quarter of 2018, when crypto deposits averaged $ 369 million.
Although this decline may partly reflect the 2018-2019 cryptocurrency market, it also suggests that the bank will face stiffer competition in the future. For the rival Metropolitan Silvergate Bank, for example, cryptocurrency deposits declined at a slower pace, just 22% year-on-year, hitting $ 1,29 billion on September 30th, the most recent date they are available. data.
Over the same 12-month period, the crypto clientele of the La Jolla, California-based bank grew 273 companies to 756 in total, representing 70% of its $ 1,8 billion in deposits. Silvergate, which was made public last year, is expected to release fourth quarter results on Wednesday 5 February. Some participants in the cryptocurrency banking market have only emerged in the past year, such as Massachusetts-based Provident Bank and Quontic in New York.
Metropolitan: Loss or Strategy?
Instead of struggling to safeguard the cryptocurrency deposit business, Metropolitan was likely happy to let go of some of these deals, said Christopher O'Connell, a banking securities analyst at investment firm Keefe, Bruyette & Woods.
"As the number of [banking] competitors entering the industry grows, some of the global rates that can be charged to customers change," said O'Connell. "Since they have a solid [deposit] pipeline ... the bank may not want to pay to get a bigger portion of this market."
Revenue from customers in digital currency has steadily increased by around 1% of Metropolitan's total since the forex conversion and fees in cash management in the crypto sector increased in the fourth quarter of 2017 and the first quarter of 2018, said O 'Connell. The period indicated coincides with the last peak in the cryptocurrency market. Metropolitan declined to comment.
In the latest fourth quarter report, the bank indicated a decrease in fees for customers in digital currency at the point where it explained why non-interest income decreased by $ 1,5 million for the entire 2019 compared to 2018.