Vast Bank disabled and removed its crypto mobile banking application effective Jan. 31, the bank announced last week.
The Tulsa, Oklahoma-based lender notified its customers that their digital assets would be liquidated and the accounts would be closed. Vast said it doesn’t support crypto transfers to another exchange or platform. Customers will receive stranded assets via cashier’s check, the bank said.
The move comes close on the heels of a cease-and-desist order initiated against Vast Bank by the Office of the Comptroller of the Currency in October. The consent order said the lender engaged in unsafe and unsound practices linked to capital and strategic planning, project management, books and records, custody account controls and risk management for new products.
According to the consent order, the lender needs to achieve and maintain a total capital ratio of at least 13% and a leverage ratio of at least 10% within 60 days following the order. Vast Bank had a total capital ratio of 4.75% on Dec. 31 and its leverage ratio was 2.46%, The Bank Slate reported.
The OCC also requires Vast to form a compliance committee that would submit a progress report within 10 days after the end of each quarter detailing the corrective actions needed or undertaken.
Vast launched its crypto banking services in August 2021, allowing customers to store and exchange digital assets.
Then-CEO Brad Scrivner said the offering allowed the bank to significantly grow its retail customer base.
“We’re probably at about 50% of what it took us 40 years to build, in terms of our retail customer population, in just those eight weeks,” he told Banking Dive in October 2021.
A year later, the crypto world suffered a major blow when FTX, the crypto exchange founded and operated by Sam Bankman-Fried, declared bankruptcy. Weeks later, Metropolitan Commercial Bank and Farmington State Bank backed out of crypto space.
Though Farmington did not mention FTX’s name, the lender said in January 2023 that the strategic pivot “reflects the impact of recent events in the crypto assets industry and the resultant changing regulatory environment.”
Metropolitan, for its part, said its exit process began in 2017 when it decided to pivot away from and not grow its crypto business.
That same month, the Securities and Exchange Commission charged crypto investment firm Genesis and crypto exchange Gemini with illegally selling securities to investors through their joint Gemini Earn crypto program.
Genesis Global agreed to pay $21 million last week to settle the SEC’s lawsuit.