Vast Bank, based in Tulsa, Oklahoma, announced this week that it has decided to shut down its cryptocurrency operations. The decision comes after the Office of the Comptroller of the Currency issued a consent order against the $1 billion-asset bank in October last year, citing concerns about unsafe or unsound practices related to capital, capital and strategic planning, liquidity risk management, and other areas.
Since February 2021, Vast Bank had been offering its customers the ability to buy cryptocurrency through partnerships with the digital exchange Coinbase and German software company SAP. This move made it the first U.S. banking institution to allow its customers to buy, sell, and hold cryptocurrencies alongside a traditional checking account.
However, in a sudden turn of events, the bank announced the closure of its Vast Crypto Mobile Banking platform effective January 31, 2024. The platform was disabled and removed from both Apple and Google app stores, and all assets were liquidated. As a result, all accounts were closed, and customers with remaining funds in their accounts will receive a cashiers check mailed to the address on file with the bank.
The decision to exit the crypto industry and refund any remaining holdings through liquidation is part of the bank’s strategic realignment of its operations. This move underscores the bank’s emphasis on addressing the concerns raised by the Office of the Comptroller of the Currency and ensuring compliance with regulatory requirements.
With this development, Vast Bank’s foray into the cryptocurrency space, which was once hailed as an innovative step in the traditional banking sector, is coming to an abrupt end. It also signals the challenges and complexities that banks face in navigating the evolving regulatory landscape and integrating emerging technologies into their offerings.
As Vast Bank grapples with the aftermath of this decision, the broader implications for the cryptocurrency industry and the banking sector remain to be seen. The closure of its crypto operations serves as a reminder of the need for careful consideration and scrutiny by financial institutions when venturing into new and rapidly developing markets, particularly those with substantial regulatory implications.
The move by Vast Bank also highlights the heightened regulatory scrutiny and oversight that cryptocurrency-related activities are subject to. As the crypto landscape continues to evolve, it is likely that other banks and financial institutions will closely monitor this development and its impact on the broader industry as they assess their own strategies in this space.
