First US bank to let customers keep cryptocurrency in checking account exits crypto

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Vast Bank, an entity claiming to be the first United States banking institution to allow its customers to buy, sell and hold cryptocurrencies “alongside a traditional checking account,” has shuttered its mobile crypto banking app and declared its intent to exit the cryptocurrency industry.

In an FAQ posted on the bank’s website, first spotted by American Banker, Vast Bank said it 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.”

Headwinds

Vast Bank entered the crypto industry in 2019 and had previously partnered with Coinbase and SAP on the company’s crypto-friendly mobile banking app in 2021. However, according to American Banker, the bank was issued a consent order from the Office of the Comptroller of the Currency in late 2023.

The OCC order reportedly claims that Vast Bank allegedly engaged in “unsafe or unsound practices” surrounding risk management and control, with the apparent focus being on the institute’s involvement in cryptocurrency.

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In November 2023, not long after the OCC order, Vast Bank issued a press release indicating that it was refocusing its efforts on “traditional banking” and would pivot away from crypto:

“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.”

Regulatory uncertainty

While Vast Bank didn’t specifically cite regulatory uncertainty, many analysts attribute the U.S. banking industry’s general reticence to commit to the cryptocurrency sector to exactly that.

As Cointelegraph recently reported, pro-crypto government officials have been vocal over their opposition to the Securities and Exchange Commission’s purported catch-as-catch-can approach to cryptocurrency regulation.