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Crypto lender Nexo gets US bank charter through acquisition deal

The crypto market has taken a hit this year, with nearly $2 trillion lost in value since its peak.

Jonathan Raa | Nurphoto | Getty Images

Cryptocurrency lender Nexo announced on Tuesday that it has acquired a stake in a federally regulated US bank, paving the way for the company to offer banking services to Americans as a licensed institution.

Zug, Switzerland-based Nexo said it has agreed to buy an undisclosed stake in Hulett Bancorp, which owns a lit.ta well-known bank called Summit National Bank. Through Summit National Bank, which is chartered as a federal bank with the Office of the Comptroller of the Currency, Nexo plans to offer a range of products, including checking accounts and crypto-backed loans.

The move is a significant development for the nascent crypto industry, which is looking to win the favor of policymakers and regulators as investment and adoption of digital assets grows. The market has been licking its wounds since the collapse of the controversial terraUSD token, which triggered a wave of liquidations and bankruptcies by companies such as Celsius and Three Arrows Capital.

Nexo declined to disclose the size of its stake in Summit National Bank. The firm called the deal “an industry-changing deal.” In addition to being able to launch new products, Nexo said its banking license will bring enhanced legal guarantees to users. The deal will also help Nexo expand its footprint in the US, the company said.

“We already have a solid offering for our crypto-backed loans, but we always want to have more than one option to provide a certain service,” Nexo co-founder Anthony Trenchow told CNBC.

“Acquiring a stake in a full-fledged bank allows us to offer a full range of services to retail and institutional customers in the US, including bank accounts, asset-backed loans, card programs, as well as deposit and custody solutions and more. other future expansion plans for Nexo in the US to be revealed in the coming months.”

Summit National Bank traces its roots back to 1984 in Wyoming, where the firm was originally founded as Hulett National Bank. The firm later opened offices in Idaho and Montana. According to its website, Summit National Bank provides primary lending in the areas of “commercial, agricultural, real estate, mortgage and construction.”

The news comes just a day after the Nexo was hit lawsuits from eight US states alleging that the company offered interest-bearing accounts to users without first registering them as securities and providing the necessary information. According to the documents, Nexo allegedly misled investors into believing it was a licensed and registered platform.

In response to the lawsuit, Nexo said it is cooperating with U.S. federal and state regulators. The company sought to distinguish itself from other players facing financial difficulties, saying it “did not engage in unsecured debt, had no exposure to LUNA/UST, required a bailout or resorted to any withdrawal restrictions.”

Nexo, which has more than $4 billion in assets under management, is not the first crypto firm to receive a banking license, although it is a rarity in the industry. Other fintech companies have previously obtained federal banking charters, including through mergers and acquisitions SoFiwhich offers crypto trading on its platform, and LendingClub.

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Crypto lender Nexo gets US bank charter through acquisition deal

The crypto market has taken a hit this year, with nearly $2 trillion lost in value since its peak.

Jonathan Raa | Nurphoto | Getty Images

Cryptocurrency lender Nexo announced on Tuesday that it has acquired a stake in a federally regulated US bank, paving the way for the company to offer banking services to Americans as a licensed institution.

Zug, Switzerland-based Nexo said it has agreed to buy an undisclosed stake in Hulett Bancorp, which owns a lit.ta well-known bank called Summit National Bank. Through Summit National Bank, which is chartered as a federal bank with the Office of the Comptroller of the Currency, Nexo plans to offer a range of products, including checking accounts and crypto-backed loans.

The move is a significant development for the nascent crypto industry, which is looking to win the favor of policymakers and regulators as investment and adoption of digital assets grows. The market has been licking its wounds since the collapse of the controversial terraUSD token, which triggered a wave of liquidations and bankruptcies by companies such as Celsius and Three Arrows Capital.

Nexo declined to disclose the size of its stake in Summit National Bank. The firm called the deal “an industry-changing deal.” In addition to being able to launch new products, Nexo said its banking license will bring enhanced legal guarantees to users. The deal will also help Nexo expand its footprint in the US, the company said.

“We already have a solid offering for our crypto-backed loans, but we always want to have more than one option to provide a certain service,” Nexo co-founder Anthony Trenchow told CNBC.

“Acquiring a stake in a full-fledged bank allows us to offer a full range of services to retail and institutional customers in the US, including bank accounts, asset-backed loans, card programs, as well as deposit and custody solutions and more. other future expansion plans for Nexo in the US to be revealed in the coming months.”

Summit National Bank traces its roots back to 1984 in Wyoming, where the firm was originally founded as Hulett National Bank. The firm later opened offices in Idaho and Montana. According to its website, Summit National Bank provides primary lending in the areas of “commercial, agricultural, real estate, mortgage and construction.”

The news comes just a day after the Nexo was hit lawsuits from eight US states alleging that the company offered interest-bearing accounts to users without first registering them as securities and providing the necessary information. According to the documents, Nexo allegedly misled investors into believing it was a licensed and registered platform.

In response to the lawsuit, Nexo said it is cooperating with U.S. federal and state regulators. The company sought to distinguish itself from other players facing financial difficulties, saying it “did not engage in unsecured debt, had no exposure to LUNA/UST, required a bailout or resorted to any withdrawal restrictions.”

Nexo, which has more than $4 billion in assets under management, is not the first crypto firm to receive a banking license, although it is a rarity in the industry. Other fintech companies have previously obtained federal banking charters, including through mergers and acquisitions SoFiwhich offers crypto trading on its platform, and LendingClub.

Reported by Source link

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