A Small Pennsylvania-Based Bank Has Replaced Silvergate as Crypto Industry’s Go-To

Customers Bancorp, a small bank based in Pennsylvania, has become a significant player in the crypto industry, partnering with hundreds of digital asset firms. The bank has become the go-to place for crypto exchanges and stablecoin issuers after the collapse of crypto-friendly lenders Silvergate Capital and Signature Bank. Like Silvergate, Customers also runs a 24/7 service for crypto clients to move funds anytime.

Customers Bank Offers Services 24/7 for its Crypto Clients

Customers, the 81st-largest US bank by assets, has become crypto’s new favorite bank in the US, according to a report from Bloomberg. The bank, which touted crypto ambitions almost two years ago when Bitcoin was at a record high, now faces little competition following the collapse of other crypto-friendly banks. 

The bank’s CEO, Sam Sidhu, states that while crypto assets are essential to the bank’s payments business, they are just one small piece of a broader plan to expand customer relationships. Customers “will be focused on the types of industries that generate us stronger and deeper customer relationships,” he said. 

Customers Bank operates a payments platform that allows crypto clients to move dollars at the same speed as cryptocurrencies, offering 24/7 access. The closure of Silvergate and Signature, which offered similar capabilities, left Customers Bank as the last remaining provider of such services, giving it a significant advantage in attracting new clients.

It is worth noting that Customers Bank didn’t count now-bankrupt crypto exchange FTX and other Sam Bankman-Fried firms among its clients. This has further strengthened the bank’s appeal among crypto businesses.

As a result, Customers Bank has seen a surge of new clients, including those from the crypto sector and the technology, venture, and fund-finance sectors. The bank’s staff worked tirelessly to onboard these new clients, and the influx of accounts led to a significant increase in deposits, Bloomberg said, citing people familiar with the matter. 

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Customers Bank Downplays its Connection to Crypto Industry

With the current state of the crypto market, Customers Bank has decided to limit the deposits on its Customers Bank Instant Token real-time payments platform (CBIT) to no more than 15% of its total. The bank’s total CBIT deposits remained steady at around $2.25 billion at the end of the first quarter, accounting for 13% of its $17.7 billion total. 

Despite the increase in deposits following the regional-bank turmoil and the closure of FTX, only a tiny portion of the new deposits came from new CBIT clients, the report said. The bank has no loans to any customers in the crypto space.

Customers Bank’s management recently downplayed its connections to the crypto industry and stopped talking about its crypto business during earnings calls. The bank has removed the webpage that provided information about its payments platform. 

Nevertheless, Customers Bank continues to do business with some of the industry’s biggest names, including USDC issuer Circle, crypto exchange Coinbase, and Paxos. 

As Customers Bank’s role in the crypto industry expands, it will likely face additional scrutiny from regulators. As reported, the Federal Reserve is considering introducing stricter capital and liquidity requirements for midsize banks following the recent collapses. 

Last month, Bloomberg released a list of crypto-friendly banks willing to work with crypto clients. The report noted that smaller regional banks and alternative payment service providers are stepping up to fill the gap, with traditional banks becoming more cautious about servicing the cryptocurrency industry. 

The list mentioned Customers Bank as the most popular choice for crypto businesses in the US. Other US lenders that have provided banking services to some cryptocurrency companies include Cross River Bank, Western Alliance Bancorp, and Axos Financial. 

Do you think Customers Bank could suffer the same fate as Silvergate and other crypto-friendly banks? Let us know in the comments below.