Cross River Bank Under FDIC Lens for ‘Unsafe’ Crypto Practices: Are Your Assets Secure?

Banking for cryptocurrencies has come into the spotlight, following the recent scrutiny faced by Cross River Bank (CRB) from the Federal Deposit Insurance Corporation (FDIC) over alleged unsafe practices. The bank, known for being crypto-friendly, has established partnerships with the likes of Circle, non-fungible token (NFT) platform Blockdaemon, and more recently the stablecoin provider Gemini. Despite these collaborations, the FDIC has slammed the bank for engaging in several unsafe practices, thus highlighting the complex relationship between traditional banking and emerging applications of cryptocurrencies.

A crypto-friendly approach to banking

As cryptocurrencies gain increased attention from the mainstream and financial sectors, a few traditional banks like Cross River Bank have moved towards establishing relationships with companies involved in crypto services. By partnering with cryptocurrency companies, these banks are acknowledging the growing importance of digital assets and financial technologies in the current monetary landscape.

Cross River Bank, founded in 2008 in New Jersey, is a classic example of a crypto-friendly institution. With over $10 billion in assets, it has carved a niche for itself in banking by adopting an open-minded approach to the emerging blockchain and cryptocurrency space. Its focus on enabling innovation has earned it partnerships with prominent blockchain companies, including Circle Internet Financial, crowdfunding platform SeedInvest, and crypto-lending platform Celsius Network.

Despite the potential risks involved in dealing with volatile digital assets, banks like Cross River Bank have sought to help integrate cryptocurrency into the broader financial landscape. The bank’s recent partnership with Gemini Trust Company, LLC, a major player in the cryptocurrency market, saw it join forces to launch a stablecoin (GUSD) pegged to the US dollar. Offering a secure and regulated alternative to traditional banking systems, the stablecoin aims to enable faster and more cost-effective transactions in the digital economy.

FDIC scrutiny raises concerns over banking practices

While the blockchain collaborations may have boosted Cross River Bank’s credentials as an innovative, crypto-friendly institution, it has not been without its challenges. The Federal Deposit Insurance Corporation (FDIC), tasked with supervising financial institutions and ensuring the safety of depositors’ funds, has recently hit the bank with a cease and desist order, warning of “unsafe and unsound banking practices.”

According to the FDIC, the bank’s internal auditing systems and risk management infrastructure were found to lack adequate and sufficiently detailed oversight policies. The regulator also expressed concerns over the bank’s rapid expansion in lending areas, stating that the established credit risk management systems were not keeping pace with the growth. Consequently, the FDIC called for an overhaul of the bank’s management practices, corporate governance arrangements, and risk management and auditing systems.

The FDIC’s actions underscore the challenge for traditional banks in operating in a field as new and rapidly changing as cryptocurrency services. While there is a clear demand for banks to adapt their business models to accommodate the growth of digital assets, the risks associated with improper risk management can pose a threat to the stability of the financial system.

Navigating the complex relationship between banking and cryptocurrency

In light of the recent FDIC scrutiny, the case of Cross River Bank highlights the complex relationship between traditional banking and the emerging cryptocurrency market. While many banks are still hesitant to actively engage in the digital asset space, several others recognized the potential of blockchain technology and have sought to incorporate it into their financial services.

As banks globally become more open to digital assets, they need to navigate the regulatory landscape carefully. Partnering with cryptocurrency companies brings banks closer to the rapidly evolving blockchain industry, helping them stay ahead of the curve in terms of innovation. However, they must also address the potential risks associated with the handling of digital assets and ensure robust and compliant risk management practices.

Regulators, in turn, must work to provide clear guidance and legislation on how blockchain technology can be used safely and responsibly within the existing financial system. Concerns about anti-money laundering (AML) and know-your-customer (KYC) regulations, fraud, and operational risks must be adequately addressed, and regulators need to adapt their supervisory frameworks to consider the potential challenges and risks posed by rapidly changing technologies.


The case of Cross River Bank’s FDIC scrutiny serves as an important lesson for other banks considering expanding their services to include cryptocurrencies. Embracing new technologies and partnering with innovative blockchain companies are essential steps for banks to stay relevant in the increasingly digital era. However, financial institutions must ensure strict risk management and compliance measures to maintain the stability of the financial system.

As the balance between banking and cryptocurrencies continues to evolve, both regulators and financial institutions must work together to foster the responsible use of digital assets, ensuring their successful integration into the mainstream. With clear and comprehensive regulation, banks can continue to pursue a crypto-friendly approach without jeopardizing the safety and security of their customers and the financial sector.


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