Skip to main content

Massachusetts-Based Bankprov to End Loan Offerings Secured by Cryptocurrency Mining Rigs

The Amesbury, Massachusetts-based Bankprov, a subsidiary of Provident Bancorp, has announced that it will no longer provide loans secured by cryptocurrency mining rigs. In a filing with the U.S. Securities and Exchange Commission (EX-99.1), Bankprov stated that revenue from its digital asset loan portfolio will continue to decrease as the company has discontinued new loan originations backed by mining equipment.

Bankprov’s Portfolio of Cryptocurrency Collateralized Loans Decreased by 65%

Bankprov disclosed that it holds approximately $41.2 million in cryptocurrency-collateralized loans, with about $26.7 million of the debt backed by crypto-mining equipment. Collateralized loans secured by application-specific integrated circuit (ASIC) mining rigs became a popular investment vehicle in 2021, but the crypto winter resulted in significant pressure on the industry. By the end of June 2022, Luxor executive Ethan Vera estimated that about $4 billion in loans backed by mining machines were under financial strain.

Since then, several crypto-mining companies have either sought bankruptcy protection or reorganized tens of millions in debt. For example, at the end of September 2022, the bitcoin mining firm Compute North filed for bankruptcy. Two months later, Core Scientific also filed for bankruptcy. Other mining operations are attempting to restructure debt. Greenidge Generation announced Tuesday that it has reorganized $11 million in debt with B. Riley.

Bankprov stated that it repossessed ASIC mining equipment from undisclosed crypto-mining operations in September. “Our digital asset loan portfolio declined by $79.3 million, or 65.8%, largely due to paydowns on outstanding lines of credit, the partial charge-off, and repossession of cryptocurrency mining rigs in exchange for forgiving a $27.4 million loan relationship,” according to Bankprov’s filing.

The financial institution’s EX-99.1 earnings filing added:

The portfolio of loans secured by cryptocurrency mining rigs will continue to decline as the Bank is no longer originating this type of loan.

Another crypto-friendly financial institution, Metropolitan Commercial Bank, announced during the second week of January 2023 that it plans to “exit its crypto-asset-related business.” Metropolitan stated that it holds no exposure to crypto assets, but has business relationships with four customers focused on cryptocurrencies. The bank did not specify an exact date, but said that these relationships and the crypto business will be phased out this year.

What do you think the future holds for banks and the cryptocurrency industry? Share your thoughts in the comments below.



from Bitcoin News https://ift.tt/GLB53DU
Labels:

Comments

Post a Comment

Popular posts from this blog

Bitcoin ETFs Snap 10-Day Streak: $93M Flees as Fidelity’s FBTC Takes the Hit

Data compiled Friday revealed a striking reversal for spot bitcoin exchange-traded funds, which snapped a ten-session inflow streak with a $93.16 million exodus—marking their first day of negative movement. Bitcoin ETFs Drain While Ether ETFs Gain The abrupt shift punctuated a previously unbroken stretch of positive momentum for U.S. bitcoin ETFs, culminating in a $93.16 […] from Bitcoin News https://ift.tt/Q1xgKWA
Post a Comment
Read more

Richard Teng Takes Charge as Binance CEO Following Changpeng Zhao’s Exit

After Changpeng Zhao’s exit, Richard Teng has stepped in as the new chief executive officer of Binance, the globe’s largest crypto exchange in terms of trading volume. On Tuesday, Teng made his introduction to the public through social media platform X, assuring that under his stewardship, Binance will “continue to meet and exceed the expectations of stakeholders.” Richard Teng Assumes Binance’s Top Role, Succeeding CZ This week marked a significant event for crypto enthusiasts as they observed one of the largest settlements in the industry’s history. The settlement involved Binance and the U.S. Department of Justice, with Binance incurring fines totaling approximately $4.3 billion. Following this development, the exchange’s CEO, Changpeng Zhao — popularly known as “CZ” — resigned. Post-settlement, on Tuesday, CZ announced via Twitter that Binance’s ex-Global Head of Regional Markets, Richard Teng, has been appointed as the new CEO. Teng brings an extensive history in the financ...
Post a Comment
Read more

Gemini Challenges SEC Lawsuit on Lending Program, Pushes for Oral Hearing

Lawyers for cryptocurrency exchange Gemini have filed a motion seeking to dismiss a lawsuit brought against it by the U.S. Securities and Exchange Commission (SEC) over its Gemini Earn lending program. In the motion, Gemini argues the SEC has failed to plausibly allege that any securities laws were violated. Gemini Moves to Dismiss SEC Claims, Advocates for Oral Argument Earlier this year, the SEC accused Gemini and its associate, Genesis Global Capital, of illicitly offering and vending unregistered securities via the Gemini Earn program. According to the SEC, both the program’s Master Digital Asset Loan Agreement and the program itself were unregistered securities unlawfully offered and sold. Gemini, however, has fired back in its motion to dismiss which seeks an oral hearing. The firm challenges the SEC’s inability to provide evidence of actual “sales” of securities — a crucial component to prove a violation of the Securities Act. Gemini emphasizes that the SEC’s allegations ...
Post a Comment
Read more