Banks Left Holding the Bag in Crypto Implosion: Marc Rubinstein

Opinion

Nov. 22, 2022, 5:00 AM

Banks go where the money is. So when a market overextends and subsequently collapses, its no surprise theyre sometimes left holding the bag.

Crypto is no exception. While major banks stayed away from what Jamie Dimon called a decentralized Ponzi scheme, many small lenders saw a profitable niche in helping to service companies operating in the fledgling space. They include Silvergate Capital Corp., Provident Bancorp Inc., Metropolitan Commercial Bank, Signature Bank and Customers Bancorp Inc., among others. The recent collapse of FTX puts their business in the spotlight.

Silvergates relationship with crypto goes back to the digital currencys early days when the market was largely limited to …