Vast Bank Exits Cryptocurrency After OCC Order, Shuts Down Mobile App

Vast Bank, an early entrant into the United States cryptocurrency banking space, recently opted for a strategic shift by discontinuing its mobile crypto banking app and announcing its departure from the cryptocurrency industry. The pivotal moment for this decision came in October 2023 when the Office of the Comptroller of the Currency (OCC) issued a consent order to Vast Bank, citing concerns about "unsafe or unsound practices" related to risk management and control, particularly in the realm of cryptocurrency.

In response to the OCC consent order, Vast Bank made the proactive choice to close its mobile crypto banking app. The decision was communicated through an FAQ on the bank's website, stating that effective January 31st, 2024, the Vast Crypto Mobile Banking application would be disabled and removed from Google and Apple platforms. Consequently, all Vast Crypto Mobile Banking accounts, along with any digital assets held in custody, would be liquidated and closed, with the remaining funds refunded to account holders.

Vast Bank initially ventured into the cryptocurrency industry in 2019, forming partnerships with notable entities like Coinbase and SAP for the development of its crypto-friendly mobile banking app in 2021. However, faced with the OCC order in late 2023, the bank swiftly announced a strategic pivot away from the cryptocurrency sector. A press release in November 2023 highlighted Vast Bank's decision to refocus on traditional banking, citing challenges posed by the dynamic and ambiguous regulatory landscape in digital banking and the macroeconomic headwinds that made future growth projections more challenging.

While Vast Bank did not explicitly reference regulatory uncertainty in its statements, industry analysts often attribute the cautious approach of U.S. banking institutions towards cryptocurrencies to the unpredictability of the regulatory environment. Notably, the decision by Vast Bank aligns with a broader trend in the U.S. banking industry, where regulatory ambiguity has led many institutions to hesitate in fully embracing the cryptocurrency sector.

Recently, government officials supporting cryptocurrency have expressed concerns about the Securities and Exchange Commission's perceived inconsistent approach to cryptocurrency regulation.