Customers Bank Reportedly Debanking Some Digital Asset Hedge Funds

Customers Bank has reportedly ended relationships with several crypto hedge funds in recent weeks, according to three sources. However, this move is not a widespread debanking of hedge-fund clients, but rather the offboarding of inactive accounts, one source clarified.

The Pennsylvania-based bank has also implemented a policy to limit its exposure to digital assets by capping deposits from crypto clients at 15% of total deposits.

Customers Bank, known for serving major crypto firms like Galaxy Digital (GLXY), Coinbase (COIN), and Circle, informed some hedge-fund clients that it could no longer provide banking services. The exact number of affected funds remains unclear, but one source indicated that numerous funds were involved. Another source emphasized that the action primarily targeted inactive accounts rather than indicating a broad debanking effort. A third source noted that several digital asset firms have been seeking new banking providers recently, potentially due to Customers Bank’s account closures.

This development underscores the ongoing challenges faced by crypto companies in accessing the U.S. banking system, especially after the collapses of Silvergate Bank and Signature Bank last year.

Customers Bank, a subsidiary of Customers Bancorp (CUBI) based in West Reading, Pennsylvania, deals exclusively in U.S. dollars and does not accept cryptocurrency or make loans for crypto activities. The bank offers a real-time blockchain-based payments platform called Customer Bank Instant Token (CBIT), which enables crypto clients to make U.S. dollar payments 24/7.

A spokesperson for Customers Bank declined to comment specifically on the policy but mentioned that the bank is selective in choosing its clients. To limit its crypto exposure, the bank has capped deposits in CBIT, which provides almost instant settlement without any fees.

“We have previously discussed publicly our 15% cap on deposits in the CBIT vertical,” the spokesperson said. “As a result of that policy limitation, we are understandably selective with respect to new business. In each of the industries that we serve, we perform extensive due diligence and seek to onboard only high-caliber clients. The digital assets industry is no exception.”

At the end of the first quarter, Customers Bank reported total deposits of approximately $18 billion, with CBIT contributing around $2 billion.