VastBank Stop Offers Crypto, Returns To Conventional Banking Business

VastBank stop crypto-related services. (Photo; Doc. NairaMetrics)

JAKARTA - VastBank, the first bank in the United States to allow its customers to buy, sell and store crypto assets along with conventional giro accounts, had discontinued their crypto services last week.

Through its official website, Vast Bank stated that it has left the crypto industry and will return all crypto assets still owned by customers through the liquidation process.

"To strategically align our operations, starting Wednesday, January 31, 2024, we will disable and remove the Vast Crypto Mobile Banking app from Google and Apple, meaning your Mobile Banking Crypto Vast account, including any Digital Assets held, will be liquidated and closed," the announcement read.

In 2021, Vast Bank collaborates with Coinbase and SAP to create crypto-friendly mobile banking apps.

"We believe we are the first national bank to allow the purchase and sale of crypto smoothly from a bank account," Brad Scrivner, CEO of Vast Bank at the time, told CNBC.

Vast Bank Withdraws From Crypto Industry

In October 2023, the Currency Supervisory Office (OCC), a banking regulatory agency in the US, issued an approval order to Vast Bank. The OCC order states that the bank is involved in "unsafe or unhealthy practices" related to risk and control management, especially those related to crypto activity.

In November 2023, Vast Bank announced that it will refocus on conventional banking businesses.

"Starting in 2019, Vast added various digital banking services such as crypto to its product portfolio. However, regulations that are constantly changing and unclear in digital banking along with macroeconomic barriers make future growth difficult to predict," the bank said in a press statement.

Reasons For Termination Of Crypto Services

Vast Bank did not explain the reasons for discontinuing their crypto services in detail. However, in an interview with local news station News on November 6, 2023, Tom Biolchini, Chairman of Vast Bank, said that the OCC order was specifically aimed at their crypto strategy.

He described the decision to step down from the crypto market as a "strategic decision," and stressed the importance of separating "crypto from community banking which is a Vast Bank."

"I believe that once they see we are making aggressive steps to get out of crypto and focus on community banks, I think we will return to the place we want," said Biolchini.

Impact Of Crypto Service Termination

Vast Bank's termination of crypto services presents challenges faced by crypto-like banks, especially amid regulatory uncertainty and intense competition.

According to data from BitMEX Research, Vast Bank is one of nine US banks that offers spot-based crypto services, namely buying and selling crypto assets directly, in contrast to other futures-based products.

Spot-based crypto products are considered more attractive to investors, as they provide more direct and cheaper exposure to the price of crypto assets.

However, spot-based crypto products also have a higher risk, as they require banks to store crypto assets under their own scrutiny, potentially causing security and compliance problems.

In addition, banks offering spot-based crypto services must also compete with established crypto platforms, such as Coinbase, Binance, and Kraken, which have a larger and more loyal customer base.

According to a CoinShares report, crypto platforms dominate the global crypto market, with a market share of about 80%, while banks only have a market share of around 20%6.

With the exit of Vast Bank from the crypto industry, the question that arises is whether other banks will follow similar steps, or instead see this as an opportunity to improve their crypto services.