Cryptocurrency lender Nexo gets US bank charter in acquisition deal

Cryptocurrency lender Nexo gets US bank charter in acquisition deal

The cryptocurrency market has been hit hard this year, with nearly $2 trillion wiped off its value since its peak.

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

Nexo, based in Zug, Switzerland, said it had agreed to buy an undisclosed stake in Hulett Bancorp, which owns the lit company.RThe bank known as Summit National Bank is called. Through Summit National Bank, which holds a federal banking charter with a currency monitor, Nexo plans to offer a range of products including crypto-backed checking accounts and loans.

The move is an important development for the emerging cryptocurrency industry, which is seeking to win over politicians and regulators as investment and adoption of digital assets grow. The market has been licking its wounds in the wake of the controversial terraUSD crash, which sparked a wave of liquidations and the failures of companies such as Celsius and Three Arrows Capital.

Nexo declined to reveal the size of its stake in Summit National Bank. The company described the deal as an “industry-changing deal.” On top of being able to launch new products, Nexo said its banking license will provide users with enhanced legal safeguards. The company said the deal will also help Nexo expand its presence in the United States.

“We already have a strong showing in terms of our crypto-backed loans, but we’ve always wanted to have more than one option to offer a particular service,” Nexo co-founder Anthony Trenchev told CNBC.

“Acquisition of a stake in a full-fledged bank allows us to offer a full range of services to our individual and institutional customers in the United States, including bank accounts, asset-backed loans, card programs, as well as escrow and custody solutions, and many other future expansion plans. NEXO in the US which will be revealed in the coming months.”

Summit National Bank’s history dates back to 1984 in Wyoming, where the company was originally registered as Hewlett National Bank. The company later opened locations in Idaho and Montana. According to its website, Summit National Bank’s primary lending is in “commerce, agriculture, real estate, mortgages, and construction.”

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

In response to the legal action, Nexo said it has been working with federal and state regulators in the United States. The company has sought to distinguish itself from other players who have experienced financial difficulties, saying that it “did not engage in unsecured loans, was not exposed to LUNA/UST, did not have to be bailed out, or needed to resort to any withdrawal restrictions.”

Nexo, which has more than $4 billion in assets under management, is not the first crypto company to gain a banking license, although it is a rare phenomenon in the industry. Other fintech companies have previously secured federal banking covenants through mergers and acquisitions, including SoFi, which offers cryptocurrency trading on its platform, and LendingClub.

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