As Metropolitan Commercial Bank announced it is quitting the crypto business, and Silvergate has collapsed, Crypto.com is watching its fiat pipelines dry up as it will soon lose the ability to accept U.S. dollar (USD) deposits. The exchange is currently able to provide Euro-denominated banking services to users in the European Economic Area (EEA), but had to scramble to find a new banking partner after its prior provider had its accounts frozen by the Lithuanian Central Bank.
An exchange that only has the ability to service users in one part of the world, and then in euros, a far less liquid currency for crypto (most crypto trading pairs are denominated in USD), is going to have questions raised about its liquidity.
“Our EUR fiat wallet service provider recently reduced access to EEA residents via the single euro [payments area (SEPA) system],” a spokesperson for Crypto.com told CoinDesk.
“As SEPA’s intended purpose is to facilitate local borderless transfers between network participants within EEA, the EUR deposits/withdrawals via this service provider are not available to those not residing in the EEA,” the spokesperson added.
All this comes as Crypto.com has faced turbulence due to its relationship with two banks and wider fallout in the crypto industry.
Crypto.com’s prior banking partner was Transactive Systems, which held licenses in the U.K. and Lithuania. The Lithuanian Central Bank, which also has the role of market supervisor for the country, ordered the company to cease dealing with virtual currencies in January because of “serious infringements” of anti-money laundering laws.
It is not known how much fiat currency belonging to Crypto.com was frozen when authorities seized Transactive Systems’ accounts.
Crypto.com will soon lose the ability to receive USD fiat deposits from U.S.-based users when its U.S-based banking partner, Metropolitan Commercial Bank, exited the crypto industry in January following a review by its Board of Directors. This is a broader problem facing the crypto industry in the United States after the collapse of Silvergate.
The exchange still offers the ability for users to buy crypto via credit card, and in September, started to waive fees for new users for the first week.
An exchange that will soon be only reliant on credit card deposits – an expensive pipeline – for USD liquidity would be the subject of broader questions about its liquidity.
A spokesperson for Crypto.com declined to name the exchange’s specific banking partners only saying it works with a “variety.” They said that a migration to a new payment provider was completed on Jan. 25.
This number is down from around 1100 in mid-January, during the mini bull market, and 10,000, when the exchange bought sponsorship rights for the National Basketball Association’s Los Angeles Lakers arena.
CRO is down 16% over the last 30 days, and 82% on-year.
CORRECTION (March 10, 2023, 08:25 UTC): Corrects to clarify that Crypto.com retail users within the U.S. can still deposit U.S. fiat currency.
UPDATE (March 10, 2023, 05:41 UTC): Adds information about Metropolitan Bank’s exit from the crypto industry and updates number of active addresses for CRO.