Crypto-friendly Cross River Bank under fire from FDIC, details inside
- New Jersey-based crypto-friendly Cross River Ban received a consent order from the FDIC seeking further oversight, even as the action isn’t tied to its crypto activities.
- The bank is well known for serving crypto enterprises such as Coinbase and Circle.
New Jersey-based crypto-friendly Cross River Bank has received a consent order from the Federal Deposit Insurance Corporation (FDIC) seeking further oversight, according to a filing made public on 28 April.
In the filing, the FDIC argued that Cross River Bank engaged in risky or unsound banking practices in violation of fair lending laws and regulations. Through a related agreement, the regulator demanded that the company implement greater oversight and controls, as well as make amends.
The order reads,
“The FDIC considered the matter and determined, and the Bank neither admits [nor] denies, that it engaged in the unsafe or unsound banking practices related to its compliance with applicable fair lending laws and regulations by failing to establish and maintain internal controls, information systems, and prudent credit underwriting practices…”
A Cross River Bank representative told the Wall Street Journal that the action is tied to a review of the company’s lending practices beginning 2021, rather than its cryptocurrency or payments business activity.
U.S. banking crisis fuels further scrutiny
Since the bank has been in operation for over a decade, the FDIC may increase its scrutiny of such financial institutions in the aftermath of the recent banking crisis.
The FDIC had earlier also questioned the bank in 2018, requiring the company to adjust certain practices and pay a fine of about $642,000.
Cross River Bank is well-known for serving and collaborating with cryptocurrency enterprises such as Coinbase and Circle.
Is there a connection between FDIC and crypto?
Even as the FDIC’s actions have nothing to do with the bank’s crypto activities, it is noteworthy in the light of the failures of other crypto-friendly banks such as Silvergate Bank and Silicon Valley Bank that failed in March 2023.
It is being speculated that further regulatory actions could make Cross River Bank’s crypto clients end their relationships or withdraw their funds in large chunks; though, there is no such update as of now.