Vast Bank to Exit Cryptocurrency Business, Shuts Down Mobile Crypto App amid Regulatory Pressure
Summary:
Vast Bank, which claims to be the first U.S. bank to offer customers the ability to buy, sell, and hold cryptocurrencies, is shutting down its mobile cryptocurrency banking app and planning to exit the cryptocurrency sector. The bank announced that it will disable the app and liquidate all digital assets on January 31, 2024. Vast Bank, which entered the crypto industry in 2019, reportedly faced a consent order from the Office of the Comptroller of the Currency (OCC), alleging "unsafe or unsound practices" involving risk management and control in relation to cryptocurrency. Following this, the bank decided to refocus its efforts on traditional banking.
Claiming to be the pioneer in the U.S. banking industry to permit customers to buy, sell, and retain cryptocurrencies in conjunction with a conventional checking account, Vast Bank has decided to shut down its mobile cryptocurrency banking application and exit from the cryptocurrency market. This information was first noted by American Banker in a Frequently Asked Questions (FAQ) section on the bank's website, where Vast Bank communicated its plan to refund any remaining cryptocurrency to its holders by way of liquidation.
"To realign our operational strategy, we will disable and remove the 'Vast Crypto Mobile Banking' app from Google and Apple platforms starting from Wednesday, January 31st, 2024. As a result, your 'Vast Crypto Mobile Banking' account(s) and any digital assets under custody will be liquidated and closed," Vast Bank stated.
Vast Bank made its entrance into the crypto market in 2019 and by 2021, had allied with Coinbase and SAP to launch its crypto-friendly mobile banking application. However, a consent order issued by the Office of the Comptroller of the Currency (OCC) in late 2023 reportedly alleged the bank of partaking in "unsafe or unsound practices" with primary emphasis on risk management and control related to cryptocurrency.
Following the OCC order in November 2023, Vast Bank declared its plan to focus on its conventional banking services and step away from cryptocurrencies. "Since 2019, we have integrated a variety of digital banking services, including cryptocurrency. However, an unstable regulatory landscape coupled with economic challenges suffocates prospects for future growth in digital banking," said the bank.
Vast Bank did not explicitly mention regulatory ambiguity as a reason for its decision to distance from the crypto sector. However, market experts believe that the general hesitation of the U.S. banking institutions toward embracing cryptocurrency is precisely due to regulatory uncertainty. As reported by Cointelegraph recently, government officials supportive of cryptocurrency expressed their disapproval of the ad-hoc approach to cryptocurrency regulation adopted by the Securities and Exchange Commission (SEC).
In this context, Rep. Mike Flood tweeted on February 1, 2024: "@GaryGensler's SAB 121 has virtually prohibited banks from being digital assets custodians. Today, @RepWileyNickel, @SenLummis, and I introduced resolutions to revoke @SECGov's unfavourable announcement. The days of SAB 121 are numbered – it's time for it to go!
Published At
2/5/2024 9:20:00 PM
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