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The cryptocurrency market has taken a hit this year, with nearly $2 trillion worth lost from its peak.
Jonathan Lah | Nafoto | Getty Images
On Tuesday, cryptocurrency lender Nexo announced that it had invested in a federally regulated US bank.
Zug, Switzerland-based Nexo said it has agreed to purchase a private stake in Hulett Bancorp, which owns Lit.tA famous bank called Summit National Bank. Nexo plans to offer various products such as checking accounts and crypto-backed loans through its currency Office Comptroller and Summit National Bank, which holds federal banking licenses.
The move is an important development for the nascent crypto industry as it seeks to gain the support of politicians and regulators as investment and adoption of digital assets grows. The market is licking its wounds following the collapse of the controversial token terraUSD. This has triggered a wave of liquidations and failures of companies such as Celsius and Three Arrows Capital.
Nexo declined to disclose the size of its Summit National Bank stake. The company called the deal an “industry-changing deal.” In addition to its ability to launch new products, Nexo said its banking license gives users enhanced legal protections. The deal will also help Nexo expand its footprint in the United States, the company said.
Nexo co-founder Antoni Trenchev told CNBC, We already have a strong offering of crypto-backed loans, but we have multiple options to offer specific services. I would like to prepare.
By acquiring a stake in a fully fledged bank, we will be able to offer a full range of services to our U.S. retail and institutional clients, including bank accounts, asset-backed loans, card programs, escrow and custodial solutions. Additional future plans for Nexo’s U.S. expansion will be revealed in the coming months.”
Summit National Bank has its origins as a Wyoming company founded in 1984, originally as Hulett National Bank. The company has since opened offices in Idaho and Montana. According to its website, Summit National Bank’s main loans are “commercial, agricultural, real estate, mortgage and construction.”
The news comes a day after Nexo was attacked. Lawsuits from eight US states The company alleged that it first registered them as securities and provided users with interest-earning accounts without providing the required disclosures. It allegedly misled investors into thinking it was a platform.
In response to the lawsuit, Nexo said it has been working with federal and state regulators in the United States. The company sought to differentiate itself from other players in financial distress by stating that it “does not engage in unsecured loans, has no exposure to LUNA/UST, does not need to be bailed out, nor does it have to resort to withdrawal limits. was. .”
With over $4 billion in assets under management, Nexo is not the first cryptocurrency company to receive a banking license, but it is a rare phenomenon in the industry. Other fintech companies have previously obtained federal banking licenses through mergers and acquisitions. Sophieoffering crypto trading on its platform, lending club.
