• Moonstone Bank, a digital bank focused on serving high-net-worth individuals, is exiting the crypto space and refocusing on its “community bank” role.
• The change in strategy reflects the impact of recent events in the crypto assets industry and the resultant changing regulatory environment.
• Moonstone has been acquired by Jean Chalopin and was invested in by Alameda Research, the trading arm of Sam Bankman-Fried’s crypto exchange FTX.

Moonstone Bank, a digital bank focused on serving high-net-worth individuals, has announced that it is exiting the crypto space and refocusing on its “community bank” role. The bank cited the recent developments in the industry and the subsequent rise in regulatory scrutiny as the reason for its decision.

The change in strategy reflects the impact of recent events in the crypto assets industry and the resultant changing regulatory environment relating to crypto asset businesses. To implement this change, the bank will no longer use the name Moonstone Bank and will be rebranding and re-adopting the Farmington State Bank name, known in the local community for 135 years.

Moonstone was acquired by Jean Chalopin, the Bahamas-based chairman of Deltec, another FTX banking partner in 2020. Chalopin’s goal was to transform Moonstone into a crypto-focused financial services firm. He secured an $11.5 million investment from Alameda Research, the trading arm of Sam Bankman-Fried’s crypto exchange FTX, in early 2022. Chalopin maintained close ties with FTX executives and Moonstone was dragged into the FTX saga. In a December 7 letter sent to Federal Reserve Chairman Jerome Powell, Federal Deposit Insurance Corporation Acting Chair Martin Gruenberg, and Acting Comptroller of the Currency Michael Hsu, Senators Elizabeth Warren and Tina Smith sought details about Moonstone’s exposure to Alameda.

Moonstone Bank’s decision to refocus on the “community bank” role is indicative of the changing regulatory environment for crypto businesses. The bank’s move away from crypto-related services illustrates the need for crypto businesses to be aware of the current regulatory landscape. As the crypto industry evolves, businesses must be aware of the potential risks and be able to adjust their strategies accordingly.

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