Vast Bank, self-proclaimed as the pioneering US bank allowing customers to manage cryptocurrencies within a traditional checking account, has decided to exit the cryptocurrency industry. The bank has closed its mobile crypto banking app and plans to refund remaining crypto holdings through liquidation.
In an FAQ on their website, the bank announced the removal of the Vast Crypto Mobile Banking application, resulting in the closure and liquidation of associated accounts and digital assets.
“To strategically align our operations, effective Wednesday January 31st, 2024, we will be disabling and removing the Vast Crypto Mobile Banking application from Google and Apple, which means your Vast Crypto Mobile Banking account(s), including any Digital Assets held in custody, will be liquidated and closed.”
Having ventured into the crypto space in 2019 and collaborated with Coinbase and SAP on a crypto-friendly mobile banking app in 2021, Vast Bank faced challenges. In late 2023, the Office of the Comptroller of the Currency issued a consent order alleging that the bank engaged in “unsafe or unsound practices” related to risk management and control, with a focus on its involvement in cryptocurrency.
Responding to the OCC order, Vast Bank, in November 2023, announced a shift away from crypto towards a renewed emphasis on “traditional banking.” The bank cited the unpredictable regulatory landscape in digital banking and macroeconomic challenges as factors complicating future growth predictions.
Chair @GaryGensler’s SAB 121 has virtually blocked banks from serving as custodians of digital assets. Today, @RepWileyNickel, @SenLummis, and I introduced resolutions to repeal @SECGov‘s terrible bulletin.
SAB 121’s days are numbered – it’s time for it to go! 📝🗑️ pic.twitter.com/jTQDdbMm3I
— Rep. Mike Flood (@USRepMikeFlood) February 1, 2024
While not explicitly citing regulatory uncertainty, analysts often attribute the broader reluctance of the US banking industry to fully embrace the cryptocurrency sector to such uncertainties. This move by Vast Bank reflects the broader challenges financial institutions face in navigating evolving regulatory frameworks in the crypto space.