Crypto lender Nexo obtains U.S. bank charter through acquisition deal


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

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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 had agreed to buy an undisclosed stake in Hulett Bancorp, which owns a lityouwell-known bank called Summit National Bank. Through Summit National Bank, which has a federal banking charter 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 fledgling crypto industry, which is looking to curry favor with politicians and regulators as investment in and adoption of digital assets grows. The market has been licking its wounds following the collapse of the controversial terraUSD token, which led to a wave of liquidations and bankruptcies by companies like 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 transaction.” In addition to the ability to launch new products, Nexo said its banking license would provide users with enhanced legal guarantees. The deal will also help Nexo expand its presence in the US, the company said.

“We already have a strong offering regarding our crypto-backed loans, but we always like to have more than one option to provide a particular service,” Antoni Trenchev, co-founder of Nexo, told CNBC.

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

Summit National Bank traces its origins to 1984 in Wyoming, where the company was originally founded as Hulett National Bank. The company later opened locations 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 just a day after Nexo was hit with lawsuits from eight US states alleging that the company offered users interest-bearing 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 the documents.

In response to the legal action, Nexo said it had been working with US federal and state regulators. The company sought to differentiate itself from other players who have had financial difficulties, saying it “didn’t engage in unsecured loans, had no exposure to LUNA/UST, she did not have to be rescued or resort to any recall restrictions. .”

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

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