Metropolitan Bank Closes Crypto-Related Businesses and Silvergate Slashes 40% Of Its Workforce
Everyone feels how hard things can be in a bear market. It is difficult to hold the position after getting the cold blows of crypto winter. It is easy to be positive and carry on business activities when the crypto market is on the uptrend.
But as soon as the crypto market changes its color, many crypto-related companies have to make harsh decisions to survive and move forward. Metropolitan Bank (MCB) decides to close its crypto-related services. According to the announcement published by MCB, the financial impact of exiting the crypto-related businesses is minimum since it represents 1.5% of total revenues and 6% of total deposits.
Most crypto-related companies have direct or indirect relationships with other crypto platforms. Once one giant collapses, all crypto-related projects and companies that have any exposure to that go through a hard time.
The impact of FTX collapse is huge, probably more than we thought before. Silvergate Bank is one of the leading banks mostly dealing with cryptocurrency transactions. Now Silvergate has to make some harsh decisions due to the present situation.
No one wants to sell assets at a loss. If any institution decides to sell its assets at a loss, there are some valid reasons. The collapse of FTX initiated a bank run and Silvergate sold its assets at a loss to cover $8.1 billion in withdrawals. They try to reduce operating costs so that they can position themselves to face more challenging situations.
Letting employees go is a tough decision. Silvergate slashes 40% of its workforce, that is about 200 employees who lose their jobs. Metropolitan Bank thinks it is better to shut down crypto-related businesses now. That's why they make this decision. It will definitely affect individuals and institutions dealing with MCB.
I think this is a great lesson for individuals and institutions. You should expand your business to grab the opportunity in a bull market, but if you expand your business too much and take a high risk, you may put your business at risk.
Hard times in a bear market teach you how to be strong financially and keep doing your thing to achieve your financial goals. If you make plans early, you are doing pretty well at this time. You are ready to grab the opportunity so that you can grow wealth and get closer to the ultimate target of financial freedom.
So what do you think? Please feel free to leave your comments. Thank you for reading this post. That's it for now. I'll be back with another post.
