First U.S. Bank to Introduce Crypto Checking Accounts Reverses Course, Closes Crypto Banking Mobile App
A bank claiming to be the first U.S. banking institution to allow its customers to buy, sell, and hold cryptocurrencies “alongside a traditional checking account,” closed its mobile crypto app last week.
In a FAQ posted on its website, Vast Bank said it was exiting the crypto industry and would be refunding any holders’ remaining crypto through liquidation.
“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,” the announcement read.
In 2021, Vast Bank partnered with Coinbase and SAP to create a crypto-friendly mobile banking app.
“We believe we’re the first national bank to enable seamless purchase and sale of cryptocurrency from a single bank account,” then-CEO Brad Scrivner told CNBC.
Vast Bank Exits Crypto
In October 2023, the Office of the Comptroller of the Currency (OCC) issued a consent order to Vast Bank. The OCC order alleged that the bank engaged in “unsafe or unsound practices” concerning risk management and control, with an emphasis on the institution’s crypto activities.
In November 2023, Vast Bank indicated that it would return to its roots and focus on traditional banking.
“Beginning in 2019, Vast added a range of digital banking services such as cryptocurrency to its product mix. … However, the ever-changing and unclear regulatory environment in digital banking coupled with macroeconomic headwinds make future growth more difficult to predict,” the bank said in the press release.
Reasons for Crypto Mobile App Closure
Vast Bank’s FAQ doesn’t specify the reasons for the closing of its crypto functions.
During a November 2023 interview with local news station News on 6, however, Vast Bank chairman Tom Biolchini stated that the OCC order was specifically directed towards their cryptocurrency strategy.
He went on to describe the decision to exit the market as a “strategic decision,” highlighting the importance of distinguishing “cryptocurrency from the community banking that is Vast Bank.”
“I believe that once they see we’re making these aggressive steps to exit crypto and focus on the community bank, I think we’ll be right back where we wanted to go,” Biolchini said.
As regulators grapple with crypto oversight, more financial institutions may find themselves walking a tightrope between innovation and compliance.
