First US bank to let customers keep cryptocurrency in checking account exits crypto
Vast Bank, the first US bank to allow customers to hold cryptocurrency in a checking account, has decided to shut down its mobile crypto app and exit the cryptocurrency industry.
Vast Bank exits cryptocurrency market
Vast Bank, an entity claiming to be the first United States banking institution to allow its customers to buy, sell, and hold cryptocurrencies alongside traditional checking accounts, has decided to shut down its mobile crypto banking app and exit the cryptocurrency industry.
In an FAQ posted on the bank’s website, Vast Bank announced that it will be liquidating and closing all Vast Crypto Mobile Banking accounts, along with any digital assets held in custody.
The decision to exit the cryptocurrency market comes as a strategic move by Vast Bank following an OCC consent order received in October 2023.
Headwinds faced by Vast Bank
Vast Bank entered the cryptocurrency industry in 2019 and had previously partnered with Coinbase and SAP on the development of their crypto-friendly mobile banking app. However, the bank faced challenges when it received a consent order from the Office of the Comptroller of the Currency (OCC) in late 2023.
The OCC order accused Vast Bank of engaging in 'unsafe or unsound practices' related to risk management and control, with a particular focus on the bank's involvement in cryptocurrency.
Following the OCC order and in light of the ever-changing and uncertain regulatory environment in digital banking, Vast Bank decided to shift its focus back to traditional banking and pivot away from crypto.
Regulatory uncertainty in the US banking industry
While Vast Bank did not explicitly mention regulatory uncertainty as a reason for their exit from the cryptocurrency market, analysts believe it to be a contributing factor for the reticence of US banks in fully embracing cryptocurrencies.
Recently, there have been concerns raised by pro-crypto government officials regarding the Securities and Exchange Commission's approach to cryptocurrency regulation, which is seen as unpredictable and inconsistent.
This regulatory uncertainty has made it challenging for banks to predict future growth and navigate the digital banking landscape with confidence.
