Nexo, a cryptocurrency lender, announced on Tuesday that it has taken a stake in a federally-regulated U.S. bank. This move paves the way for the company to offer banking services to Americans as a licensed institution.
This is a significant development for the young crypto industry, which is working to gain support from politicians and regulators as investment and adoption of digital assets increases. The market has been struggling since the collapse of the controversial token terraUSD, which led to a wave of liquidations and failures of companies like Celsius and Three Arrows Capital.
Nexo's stake in Summit National Bank is undisclosed. The firm called the deal an “industry-changing transaction.” Nexo said the bank license would bring users enhanced legal safeguards, in addition to the ability to launch new products. The deal will also help Nexo expand its footprint in the U.S., the company said.
Nexo co-founder Antoni Trenchev told CNBC that the company already has a robust offering of crypto-backed loans, but that they always like to have more than one option for providing a particular service.
Nexo is excited to announce that it has acquired a stake in a full-fledged bank. This will enable Nexo to offer its complete range of services to U.S. retail and institutional clients, including bank accounts, asset-backed loans, card programs, as well as escrow and custodial solutions. This is just the beginning of Nexo's plans for expansion in the United States, so stay tuned for more exciting announcements in the months to come!
Summit National Bank was founded in 1984 in Wyoming. The bank later expanded to Idaho and Montana. According to its website, Summit National Bank’s primary lending focus is on commercial, agriculture, real estate, mortgages, and construction.
Nexo is facing lawsuits from eight U.S. states for allegedly offering users interest-earning accounts without first registering them as securities and providing necessary disclosures. The states allege that Nexo misled investors to believe it was a licensed and registered platform.
Nexo responded to the legal action by saying that it had been working with U.S. federal and state regulators. The company sought to differentiate itself from other players that have run into financial difficulty, saying that it "did not engage in uncollateralized loans, had no exposure to LUNA/UST, did not have to be bailed out, or needed to resort to any withdrawal restrictions."
Nexo, which has over $4 billion in assets under management, is one of the few crypto firms to have obtained a banking license. Other fintech companies have previously obtained federal banking charters through mergers and acquisitions, including SoFi, which offers crypto trading on its platform, and LendingClub.
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