As a crypto investor with a few years of experience under my belt, I’ve seen firsthand how the banking industry’s relationship with cryptocurrency has evolved. The recent news about Customers Bank cutting off some hedge fund clients is concerning, but not entirely surprising given the increasing regulatory scrutiny and instability in the sector.
Customers Bank, headquartered in Pennsylvania, has begun terminating its relationship with certain hedge funds among its cryptocurrency industry clients. According to sources close to the situation, the bank has chosen to “discontinue service” for specific funds without specifying the exact number. One insider noted that this action only affected dormant accounts and was not as drastic as a complete withdrawal from the sector, known as debanking.
Customers Bank Tightens Crypto Hedge Fund Services
The Customer Bank Instant Token (CBIT). CBIT is a blockchain-based payment system facilitating 24/7 USD transactions for more than a hundred digital asset companies.
The spokesperson from Customers Bank acknowledged that the institution is particular about choosing its clients as part of their risk management strategy. Previously, they have made it known that they limit their exposure in the CBIT vertical to a maximum of 15%. Consequently, they are stringent when it comes to accepting new businesses and conduct thorough investigations into each industry they serve.
FDIC Highlights Insolvency Risks in Banks
As a crypto investor, I’ve noticed an unsettling trend in the traditional banking sector. The warning bells have been ringing loud and clear lately. The Federal Deposit Insurance Corporation (FDIC) has raised red flags about potential insolvency risks within the U.S. banking system, revealing a staggering $517 billion in unrealized losses and singling out 63 banks that are at risk. These troubling signs come amidst disappointing manufacturing data, with the ISM Manufacturing PMI showing a more pronounced contraction than anticipated. The combination of these factors has left me feeling uneasy about the stability of the broader financial system.
The easing of the U.S. Federal Reserve’s stance lately has fueled a surge in Bitcoin‘s price and the broader cryptocurrency market. At present, Bitcoin is displaying optimistic trends with a 0.08% price hike, reaching a value of $71,145.
The Federal Reserve Board’s choice to conclude the Bank Term Funding Program (BTFP) on March 11 puts additional pressure on regional banks, increasing the risk complexity that financial institutions such as Customers Bank need to manage.
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2024-06-08 02:30