Vast Bank bids farewell to crypto deposits, regulatory concerns arise.

TLDR:

Vast Bank, the first US banking institution to offer cryptocurrency services, has exited the crypto market due to regulatory concerns. The bank received a cease-and-desist letter from the US Office of the Comptroller of the Currency in October, which cited unsafe or unsound practices related to various aspects of the bank’s operations. Despite the bank’s claim that its decision to leave the crypto space is a strategic move, industry experts believe that lack of traction and clarity around holding cryptocurrencies in traditional demand deposit accounts are also key factors. Vast Bank had partnered with software firm SAP and Coinbase to offer customers the ability to buy and sell various cryptocurrencies.

Key elements:

• Vast Bank removes its cryptocurrency services after receiving a cease-and-desist letter from the US Office of the Comptroller of the Currency in October.
• The letter cited various unsafe or unsound practices related to capital, liquidity risk management, IT controls, and more.
• Vast Bank’s decision to exit the crypto market is seen as a response to regulatory concerns, lack of traction, and lack of clarity around holding cryptocurrencies in traditional demand deposit accounts.
• Experts believe that if there had been a higher demand from consumers for crypto services from their banks, there might have been more pressure on regulators to find a workable regulatory solution.
• Vast Bank had partnered with SAP and Coinbase to offer customers the ability to buy and sell cryptocurrencies.