Customers Bank Said to Debank Some Digital Asset Hedge Funds

As an analyst with a background in financial services and experience covering the crypto industry, I find Customers Bank’s decision to debank certain crypto hedge funds a noteworthy development. While it is important to note that the extent of this culling remains unclear, it is significant that some large players in the crypto space have reportedly been impacted.

Three sources familiar with the situation have reported that Customers Bank, a financial institution catering to notable crypto companies such as Galaxy Digital (GLXY), Coinbase (COIN), and Circle, has informed certain hedge funds that they will no longer be able to offer them banking services.

Although the scope of the reduction in numbers is uncertain, one individual mentioned that “a significant amount of money” was implicated. A second person described it as the process of removing inactive accounts, not a industry-wide disconnection of services. A third person shared that their digital assets financial company had been contacted by several funds seeking new vendors recently, possibly due to the removal of accounts at Customers.

As a crypto investor, I’ve noticed that recent events have brought to light the challenges some cryptocurrency businesses face in gaining access to the US dollar banking system following the demise of Silvergate and Signature Banks last year.

A Pennsylvania-based company situated in West Reading, with ownership by Customers Bancorp (CUBI), exclusively handles U.S. dollars and rejects cryptocurrency transactions or loan applications related to crypto activities. Boasting more than a hundred digital asset firm clients, this organization provides them with a real-time payment platform called Customer Bank Instant Token (CBIT). This innovative system enables crypto firms to process U.S. dollar transactions around the clock.

A representative from Customers Bank chose not to discuss their policy publicly, instead stating that the bank is selective when it comes to accepting new clients. To minimize risk associated with crypto transactions, the bank has established a limit for deposits in CBIT (Customers Instant Bank Transfer), which offers swift transfers and does not charge any fees.

The spokesperson explained, “Previously in the open forum, we mentioned our 15% restriction on deposits within the CBIT sector. Consequently, we apply a stringent standard when considering new business. Through rigorous background checks, we aim to bring in only top-tier clients across all industries, including digital assets.”

At the close of the initial quarter, the total deposits amounted to approximately $18 billion. Among these, CBIT accounted for roughly $2 billion.