Bitcoin, Ethereum, Cardano, Filecoin, Litecoin, Orchid, Algorand, and Bitcoin Cash are eight cryptocurrencies that can now be purchased direct from an FDIC-insured checking account if you are a customer of Vast Bank, NA The bank’s move to offering Crypto was approved by the OCC, but it also involved talks with the Federal Reserve. Vast Bank, NA is now the first state-chartered bank in the US to offer the ability to buy, sell, and hold cryptocurrencies directly from a checking account – all under one roof.
“This is great news for the cryptocurrency community. In the past, it has been difficult for digital asset companies to even get banking services, let alone have a bank that provides digital asset services. I see this as a step in the right direction and I suspect we will see more banking / digital asset ventures going forward, ”said Judith Rinearson, partner at K&L Gates, a legal professional who helps many cryptocurrency clients.
Irina Berkon, CFO of Metallicus, a US crypto exchange, commented: “The use of blockchain technology has increased, particularly in the financial services space. Adequate, thoughtful, and progressive regulation is key to promoting legitimate digital asset use cases. I am very excited to see Vast Bank opening its doors to the non-bank population of crypto owners, blockchain development companies, innovators and creators who benefit from the strict regulations of a financial institution. ”
I had the opportunity to interview Scrivner who shared Vast Bank’s journey in what is today the first OCC regulated bank that allows customers to buy crypto directly from their bank accounts. He attributes both the rising popularity of crypto and his understanding of the technology that enabled his organization to be agile enough to move into the world of crypto custody.
Brad Scrivner, CEO of Vast Bank, NA, was the first to run this OCC-chartered institution … [+]
Brad Scrivner / Big Bank
Scrivner claims that a national bank is the best place to buy and sell cryptocurrencies. “We’re familiar with regulation, we’re going to do the right things, we’re going to do things to make sure the financial system stays safe and sound,” said Scrivner.
Regarding the types of customers who would come to his bank to buy cryptocurrencies instead of buying them on an exchange, Scrivner stated, “There are many different customers out there who may want to control everything and have their own wallet, have their own passcodes. and then there are those who are interested in crypto and prefer to work with a bank or an intermediary just because they don’t quite understand it. ”
Below is my interview with Scrivner at Vast Bank, the first state bank to offer both custody and exchange of crypto directly from a bank account.
Jason Brett: Welcome. I’m very excited to speak to you today about a big announcement that came after an initial announcement of the bank’s successful test in January of a US dollar cryptocurrency purchase from a bank. Could you give us some background information on what your bank has been interested in dealing with cryptocurrency?
Brad Scrivner: The decisions included how [Vast Bank] tried to stay relevant to what we believe to be ever changing customer preferences. We also believe that the technology has enabled customers in ways that really wasn’t possible before in the financial services industry, and that cryptocurrencies would be very disruptive to financial services. So for us we are family-owned and wanted to make the decision to have a platform and also have the people with whom we can quickly adapt to the wishes of the customers.
board: What initiated the step of testing the safekeeping of cryptocurrencies at your bank?
The background that led to the decision on the cryptocurrency was determined by the announcement of the OCC by Mr. Brian Brooks in July 2020 when he announced that we could hold crypto assets with a national bank charter. We brought our shareholders and our board of directors together and went through the business cases. And we decided to go ahead and take our minds off some of the other things we were doing and prioritize crypto in our work.
Board: Was blockchain and cryptocurrency new to you and your bank? Was it on your radar before Brian Brooks’ announcement?
Clerk: Yes – I had known blockchain since 2009. Beginning in 2016, we had conversations with our shareholders about disruptions that we thought were going to happen and how I thought they were going to happen massive consolidation in the financial services space. We spoke to our shareholders about blockchain use cases that we thought might exist, such as trade finance, cross-border payments, or foreign exchange for our bank. The time we spent understanding the technology enabled us to be agile enough to pan and prioritize cryptocurrencies
Vast Bank, NA logo
Board: They brought some world class partners like Coinbase, the largest US exchange, and also SAP to the table. What can you say about these partnerships and how did you bring them all together to achieve this?
Clerk: As you can imagine, implementing this technology is not easy for a relatively small bank. Historically, at least, SAP is considered to be one of the largest companies in the world serving the financial services industry. They believed in what we do and they were great partners. At Coinbase it was an introduction from one of our FinTech partners. Coinbase thought it was a really good opportunity for a bank to serve segments of their customers and different types of customers. And they continue to be a really good partner in terms of referrals to encourage people to talk to us about the possibility of custody.
board: What kind of market research did you do before getting into cryptocurrency?
Clerk: A Gallup poll and our own internal polls showed us that more than 60 percent of people are at least interested in crypto – which I like to call “crypto-curious”. But they also say that we want to include a bank in our custody of the cryptocurrency. After the announcement of our successful test in February, we contacted a significant “whale” in the industry that was specifically waiting for a national bank to participate.
And why is that Well, we’re going to be rated highly, we’re going to do the right things. We will do our reviews, we will do the due diligence that is appropriate for a national bank. I can get up very quickly on this. So that’s why the Defi world should embrace this and we have to work together, right? There are many different customers out there, from discerning customers who might want to control everything and have their own wallet and passcodes, to those who are “crypto-curious” and prefer to work with a bank or an intermediary, just because they don’t quite understand. And we’re familiar with regulation, we’re going to do the right things, we’re going to do things to make sure the financial system is safe and sound.
Board: Can you tell us about the services that people can now enjoy at your bank?
Clerk: We introduced crypto services for individuals as a “self-service” function. When customers fund a normal bank account, they have the option to buy eight cryptocurrencies by simply signing up for that account. If you ask for custody and exchange, you can buy, sell and store these eight cryptocurrencies by opening a single bank account. Technically, each of these cryptocurrencies is behind the scenes on a different account, but will be displayed on your mobile device so you can understand what you have in each of these coins – but it is settled and comes straight from your bank account. So there is an immediate settlement to your checking account when you sell the cryptocurrencies, or an instant settlement to buy the cryptocurrency as well.
Board: Which eight cryptocurrencies does your bank offer?
Clerk: Bitcoin, Ethereum, Cardano, Filecoin, Litecoin, Orchidee, Allgerand and Bitcoin Cash.
Mapping of the interface of Vast Bank, NA, an OCC-regulated national bank that enables purchases … [+]
Big bank NA
Board: If I had Bitcoin that I had already bought, could I transfer it and have Vast Bank as custodian?
Clerk: Not yet. This is on our roadmap and we are actively working on it. And I promised my team I wouldn’t give a time frame for this – I’d like to give a time frame. But you’re a former regulator, so you get it – a lot of people don’t get it. We are required to understand the origin of funds in a bank. All funds go through the KYC process and our BSA and AML program to ensure we know the type of activity to expect on an account. When we think of the poly network hack that just happened. The part that interests me the most is obviously that this person was involved in the KYC process somewhere, right? And due to the nature of the blockchain, there was suddenly a traceability to identify this person. So if it was a bad actor he was forced to, say, return. There are other cases where the coins disappeared and the like. As a regulated company, we are committed to doing the right thing. Part of that is understanding where those coins come from. And to do that we need to have tools and people in place who are able to do the right KYC / BSA / AML activities. And for that we need to have the tools to analyze the chain. That is the process, we have already selected our partners, we have signed the contracts. We are committed to this program, but as you know, there is a huge difference between deciding to do something, operationalizing it, and scaling it up. There’s a lot of new wealthy people out there and let’s face it, some of the early adopters are walking around and I don’t know how they sleep at night, you know, with their wallets, right? It’s the equivalent of having your house burn down. And all of your money is kept under the mattress. You know, that’s why there is so much interest in it that a national bank comes into play. People are tired of practically burying their money in the back yard and are afraid it will be stolen or whatever the case may be.
Disclosure: I have Bitcoin in my financial portfolio and I am also a consultant to Metallicus, Inc.