Cross River Bank, a New Jersey-based lender that serves crypto companies like Coinbase and Circle, has received a FDIC notice that demands further oversight.
The filing, made public on April 28, suggests that Cross River Bank engaged in “unsafe or unsound banking practices” related to fair lending laws and regulations.
As a result, the regulator demanded that the company introduce greater oversight and controls, as well as make corrections through a related agreement.
The FDIC’s actions are not related to the bank’s cryptocurrency business, but rather to a review of the company’s lending practices from 2021.
A Cross River Bank representative confirmed this to the Wall Street Journal, stating that the order is related to the bank’s compliance with lending laws, not its crypto activity. The bank will neither admit nor deny wrongdoing, according to the order.
This is not the first time Cross River Bank has been targeted by the FDIC. In 2018, the regulator compelled the company to change certain practices and pay a fine of nearly $642,000. Despite this, the bank has continued to serve crypto clients, including Coinbase and Circle.
In March 2022, a partner firm of Andreessen Horowitz described Cross River Bank’s “crypto first” strategy to TechCrunch, stating that the firm supports “many other leading crypto companies.”
The failures of other crypto-friendly banks, such as Silvergate bank and Silicon Valley Bank, in March demonstrate that significant controversy could cause Cross River Bank’s crypto clients to break ties with the bank or lead clients to make higher-than-usual withdrawals. However, there is no indication that this is occurring at present.
Cross River FDIC
While Cross River Bank’s actions are not directly related to cryptocurrency, they underscore the importance of regulatory compliance in the crypto industry.
As crypto companies continue to grow and attract mainstream attention, they must ensure that they are following all applicable laws and regulations to avoid damaging their reputations and jeopardizing their relationships with key partners like banks.