Oklahoma-based Vast Bank, once boasting the title of the first US bank to integrate crypto trading directly into its checking accounts, has officially exited the cryptocurrency market.
The closure of their crypto-friendly mobile app, “Vast Crypto,” marks a significant development in the evolving relationship between traditional banks and the volatile world of cryptocurrency.
Early Entry And Rapid Growth
Vast Bank first dipped its toes into the crypto pool in 2019, partnering with US crypto exchange Coinbase and German software firm SAP to create a unique banking experience.
By 2021, the launch of their dedicated “Vast Crypto” app allowed customers to buy, sell, and hold cryptocurrencies alongside their traditional checking accounts. This innovative approach reportedly contributed to a 50% growth in Vast’s retail customer base within only eight weeks, highlighting the potential appeal of crypto integration for some banks.
Regulatory Hurdles And Market Volatility
However, Vast Bank’s crypto ambitions faced scrutiny from the Office of the Comptroller of the Currency (OCC) in late 2023. The regulatory body issued a consent order citing concerns about “unsafe or unsound practices,” including those related to capital ratios, risk management, and technology controls specifically linked to Vast’s crypto activities. This intervention coincided with the collapse of major crypto exchange FTX, which plunged the entire market into turmoil.
Total crypto market cap at $1.604 trillion on the daily chart: TradingView.com
Strategic Exit And Uncertain Future
In a recent report by American Banker, Vast Bank’s Chief Executive, Tom Biolchini, revealed that the decision to exit the cryptocurrency market was a strategic move directed by the Office of the Comptroller of the Currency (OCC).
Biolchini, in an interview with local news station News on 6, shed light on the bank’s response to the OCC order, stating that it was specifically aimed at their involvement in the cryptocurrency sector.
Lingering Questions And Market Impact
Vast Bank’s exit raises several questions about the future of traditional bank involvement in cryptocurrency. Will other institutions follow suit, deterred by regulatory hurdles and market volatility? Or will some persevere, seeking innovative ways to navigate the complexities of this emerging financial landscape? Only time will tell.
This development highlights the regulatory uncertainty surrounding crypto within the banking sector. While the potential benefits of integration are undeniable, banks face significant challenges in ensuring compliance and mitigating risks.
What Does This Mean For Crypto Investors And Consumers?
Investors and consumers interested in crypto should carefully consider the regulatory landscape and inherent volatility before making any investment decisions. Banks looking to enter the crypto space will need to demonstrate robust risk management and compliance strategies to navigate this complex and evolving market.
Featured image from Adobe Stock, chart from TradingView