• The FDIC is taking enforcement action against Cross River Bank for failing to establish proper internal controls and credit underwriting practices.
• The bank must increase its supervision of management, assume responsibility for all transactions, and implement safety measures.
• CRB has been one of the foundational banks during the fintech renaissance period, partnering with some of the first and biggest fintech players.
FDIC Takes Action Against Cross River Bank
The Federal Deposit Insurance Corporation (FDIC) has started enforcement action against Cross River Bank (CRB), a crypto-friendly financial institution based in New Jersey. The FDIC claims that the bank hasn’t done enough to protect customers’ assets. The order was filed in early March, but was only recently made public.
Orders from FDIC
The order states that CRB must strengthen its supervision of management by implementing internal controls and credit underwriting practices to ensure compliance with applicable fair lending laws and regulations. Additionally, the bank must assume responsibility for all transactions regardless of size or assets involved.
Crypto Banking Crisis
This news comes at a time when several crypto-based banks have failed due to America’s worst banking crisis since the Great Recession of 2008. Among those that have gone bankrupt are Silicon Valley Bank, Signature, and Silvergate while others like Credit Suisse were saved through buyouts just before they went under as well.
Cross River Bank Response
An anonymous spokesperson from CRB noted that while no wrongdoing is being admitted or denied, they are looking forward to working with the FDIC to implement appropriate safety measures. They also mentioned that CRB is one of the founding banks during the fintech renaissance period and partners with some of the first and biggest fintech players around today.
Conclusion
It remains unknown how this news will affect other crypto-based banking institutions but it certainly serves as a cautionary tale about what can happen if proper safety measures aren’t put into place in regards to customer assets.