Key Takeaways
- • Customers Bank has debanked a number of crypto hedge funds in recent weeks, according to three people familiar with the matter, though the extent of the offboarding remains unclear.
- • One source characterized the action as housekeeping: the offboarding of inactive accounts rather than a widespread debanking of digital asset hedge-fund clients.
- • The bank caps deposits from crypto clients at 15% of total deposits; CBIT deposits were about $2 billion out of roughly $18 billion in total deposits at the end of Q1 2024.
- • Customers Bank, owned by Customers Bancorp (CUBI), services well over a hundred digital asset firms, including Galaxy Digital (GLXY), Coinbase (COIN) and Circle.
- • The development underscores continued difficulty for crypto firms accessing U.S. dollar banking after the collapse of Silvergate Bank and Signature Bank in 2023.
Summary
Customers Bank has told some hedge-fund clients focused on digital assets that it can no longer provide them with banking services, according to three people familiar with the matter reported by CoinDesk. One person said "a load of funds" were affected, but the total extent of the account closures is unclear. A second person described the action as the offboarding of inactive accounts rather than a broad industry-wide debanking, and a third said a digital assets financial services firm had fielded inquiries from several funds seeking new banking providers in recent weeks, possibly as a result of the Customers account closures.
The West Reading, Pennsylvania-based bank, owned by Customers Bancorp (CUBI), deals only in U.S. dollars and does not accept cryptocurrency deposits directly or make loans to support crypto activities. Its clients, estimated at well over a hundred digital asset firms, use the Customer Bank Instant Token (CBIT) platform, a real-time blockchain-based payments system that enables 24/7 U.S. dollar payments. The bank has capped deposits from crypto clients at 15% of total deposits to limit its digital asset exposure. Total deposits at the end of the first quarter were about $18 billion, with CBIT contributing around $2 billion.
A Customers Bank spokesperson declined to comment on the specific policy but said the bank is selective about new business because of the deposit cap. "We have previously discussed publicly our 15% cap on deposits in the CBIT vertical," the spokesperson said. "As a result of that policy limitation, we are understandably selective with respect to new business. In each of the industries that we serve, we perform extensive due diligence and seek to onboard only high-caliber clients. The digital assets industry is no exception."
The report comes amid lingering challenges for crypto companies seeking U.S. dollar banking access following the 2023 failures of Silvergate Bank and Signature Bank.
The West Reading, Pennsylvania-based bank, owned by Customers Bancorp (CUBI), deals only in U.S. dollars and does not accept cryptocurrency deposits directly or make loans to support crypto activities. Its clients, estimated at well over a hundred digital asset firms, use the Customer Bank Instant Token (CBIT) platform, a real-time blockchain-based payments system that enables 24/7 U.S. dollar payments. The bank has capped deposits from crypto clients at 15% of total deposits to limit its digital asset exposure. Total deposits at the end of the first quarter were about $18 billion, with CBIT contributing around $2 billion.
A Customers Bank spokesperson declined to comment on the specific policy but said the bank is selective about new business because of the deposit cap. "We have previously discussed publicly our 15% cap on deposits in the CBIT vertical," the spokesperson said. "As a result of that policy limitation, we are understandably selective with respect to new business. In each of the industries that we serve, we perform extensive due diligence and seek to onboard only high-caliber clients. The digital assets industry is no exception."
The report comes amid lingering challenges for crypto companies seeking U.S. dollar banking access following the 2023 failures of Silvergate Bank and Signature Bank.
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