Cross River Bank, a US bank known for being “crypto-friendly”, has been challenged by the Federal Deposit Insurance Corporation (FDIC) for “unsafe or unsound banking practices” regarding its fair lending services. The bank has reached an agreement with the regulatory body to correct the shortcomings observed, and ensures that this does not concern its crypto services.
Cross River Bank in SEC nets
Cross River Bank, one of America’s leading crypto-friendly banksreceived an order from the Federal Deposit Insurance Corporation (FDIC) about “ unsafe or unsound banking practices about its Fair Lending services.
The bank, which counts the giant Circle among its customers since the collapse of Silvergatehas neither admitted nor denied the facts, and has reached an agreement with the regulator to correct what is described as the failure to establish and maintain ” internal controls, information systems and prudent credit underwriting practices “.
According to a Cross River Bank spokesperson, the FDIC order is not expected to have a significant impact on the institution’s growth. Moreover, the facts alleged against the crypto-bank do not relate to any of its services relating to cryptocurrenciesbut rather its traditional banking services.
Cross River Bank, like Silicon Valley Bank, is one of the banking establishments specializing in the fintech sector, whether in terms of loans or payment services. According to Bloomberg, the bank recorded $5.7 billion in deposits in its coffers at the end of 2021.
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Crypto-friendly banks in trouble
Gilles Gade, chief executive of Cross River Bank, said in an April 28 statement that the pace of checks on banks had increased significantly since the collapse of Silicon Valley Bank last March.
Barney Frank, a board member of Signature Bank – which also closed last month, said that “ regulators wanted to send a very strong message against cryptocurrencies by closing the bank “.
Chain reactions caused by the bankruptcy of Silvergateyet a leader in the sector of banking services for companies in the crypto environment, which failed to stay afloat following the successive collapses of Terra (LUNA), 3AC and then FTX, which dealt it the fatal blow.
Following these setbacks, regulators are monitoring crypto-friendly banks more than ever, while their number is considerably reduced. As a result, banks considered close to the sector are extra cautious, to the point that Binance US is unable to find an establishment for its operations.
In addition, “classic” banks do not necessarily meet the needs of crypto businesses, in particular due to their closure on weekends. It is for this reason that Silvergate customers used the Silvergate Exchange Network (SEN), which allowed instant transfers between its customersat any time.
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Source: Bloomberg
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make the blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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