Written by Hazel J. Greene, Senior Analyst

In the aftermath of the collapse of two prominent crypto-friendly lenders, Silvergate Capital Corp. and Signature Bank, a small Pennsylvania-based bank called Customers Bank has emerged as a top choice for crypto businesses, according to a Bloomberg report. With its innovative approach to managing risk and deep customer relationships, Customers Bank has solidified its position as a facilitator of dollar transactions for the crypto industry.

Established in 1997 under the name New Century Bank, Customers Bank is a Pennsylvania-based financial institution that underwent a rebranding in 2011 to better reflect its commitment to building strong customer connections. Over the years, Customers Bank has garnered attention through its partnerships with digital asset firms, including exchanges, market makers, and stablecoin issuers.

But why Customer Bank? Let me break down into the details and explain why

1. Stability Amidst Turmoil:
While Silvergate and Signature Bank were forced to close down due to regional bank disruptions earlier this year, Customers Bank has stood firm as a reliable banking partner for the crypto industry. This steadfastness can be attributed to the bank’s approach to managing risk.

2. Robust Risk Management:
Unlike many of its competitors, Customers Bank mitigates risk by holding CBIT deposits in US currency instead of investing them in securities or loans. This allows the bank to quickly fulfil withdrawal demands, ensuring crucial access to funds for its crypto clients.

3. Insured Cash Sweep:
Customers Bank offers clients a crucial service called insured cash sweep, which distributes large deposits among multiple banks. This enables depositors, including crypto businesses holding significant sums of money, to maximize their Federal Deposit Insurance Corp. coverage, despite the standard $250,000 cap on FDIC-insured deposits. Such security is vital for the industry.

Within the crypto sector, Customers Bank has gained substantial success, but its CEO, Sam Sidhu, has made the decision to limit deposits on the Customers Bank Instant Token real-time payments platform (CBIT) catering to crypto clients to no more than 15% of the bank’s total. Although deposits for CBIT remained steady at around $2.25 billion, accounting for 13% of the bank’s $17.7 billion total at the end of the first quarter, Customers Bank is primarily focusing on expanding its payments business and developing deeper customer relationships across various industries.

Customers Bank’s achievement as a reliable choice for the crypto industry may attract the attention of regulators who have previously warned banks about potential risks associated with serving the sector. Nonetheless, despite the existing challenges, Customers Bank’s success offers hope for the future of crypto banking. The growth of the industry may encourage other small banks to follow suit and establish partnerships with digital asset businesses, fostering the necessary support for their progression.

Customers Bank, a Pennsylvania-based institution, has emerged as a game-changer in the crypto industry following the collapse of other crypto-friendly lenders. With its risk management strategies, insured cash sweep service, and commitment to deeper customer relationships, Customers Bank has cemented its role as a reliable facilitator of dollar transactions for crypto businesses.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.