Bitcoin, Ethereum, Cardano, Filecoin, Litecoin, Orchid, Algorand and Bitcoin Cash are eight cryptocurrencies now available for purchase directly from a FDIC-insured checking account if you are a customer of Vast Bank, N.A. According to the CEO Brad Scrivner, the bank’s move into offering crypto was approved by the OCC, but also included discussions with the Federal Reserve as well. Vast Bank, N.A. is now the first federally chartered bank in the U.S. to offer the ability to buy, sell, and custody cryptocurrencies – directly from a checking account – all under one roof.
“This is great news for the cryptocurrency community. It has historically been difficult for digital asset companies to even get banking services, much less to have a bank that provides digital asset services. I view this as a step in the right direction, and I suspect that we will see more banking/digital asset ventures in the future,” said Judith Rinearson, Partner at K&L Gates, a legal expert who helps navigate many cryptocurrency clients.
Irina Berkon, CFO at Metallicus, a U.S.-based crypto exchange commented, “The application of blockchain technology has been growing, especially in the financial services arena. Proper, thoughtful and progressive regulation is key to promoting legitimate use cases for digital assets. I am so happy to see the Vast Bank opening its doors to the unbanked population of crypto holders, blockchain development companies, innovators and creators who benefit from strong regulations by a financial institution.”
I had the chance to interview Scrivner who shared the journey of Vast Bank in what today is the first OCC regulated bank to allow customers to purchase crypto directly from their bank accounts. He attributes both the rising popularity of crypto and his understanding of the technology that has allowed his organization to be agile enough to shift into the world of crypto custody.
Scrivner asserts that a national bank is the best place to buy and sell cryptocurrency. “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 kept safe and sound,” said Scrivner.
As to the types of customers that would come to his bank to purchase cryptocurrency as opposed to off on an exchange, Scrivner declared, “There’s lots of different customers out there that may want to control everything and have their own wallet, their own passcodes, and then there are those who are crypto curious and may prefer to work with a bank or an intermediary, just because they don’t quite understand.”
Below is my interview with Scrivner of Vast Bank, the first federally chartered bank to both offer custody and exchange of crypto directly from a bank account.
Jason Brett: Welcome. I’m really excited to talk to you today about a huge announcement that was made on the heels of an initial announcement regarding the bank’s successful test in January of a cryptocurrency purchase with U.S. dollars at a bank. Could you tell us a little bit background of what interested your bank to deal with cryptocurrency?
Brad Scrivner: Thanks, Jason. Vast Bank wanted to remain relevant to what we thought were going to be ever changing customer preferences. For context, Vast Bank is a 39 year old family-owned national bank that also believe that technology has enabled the customer in a way that it really hadn’t been enabled in the financial services industry previously, and that cryptocurrency was going to be very disruptive in financial services. And so for us, we’re family owned and wanted to make a decision to have a platform in place, and also to have the people in place where we could be able to adapt quickly to what customers were asking for.
Brett: What initiated the move to start the process of testing the custody of cryptocurrency at your bank?
The background which led to the cryptocurrency decision was driven by the announcement of the OCC by Mr. Brian Brooks in July of 2020 when he made the announcement that with a National Bank Charter that we were able to custody crypto assets. We got our shareholders and our Board together and went through the business cases. And we decided to go ahead and pivot off of some of the other things that we were doing and to prioritize crypto in our work.
Brett: Was blockchain and cryptocurrency new to you and your bank? Was it on your radar before the announcement from Brian Brooks?
Scrivner: Yes – blockchain was something that I’ve been familiar with all the way back to 2009. Starting in 2016, we were having discussions with our shareholders about disruption that we felt like was going to be happening and what I felt like was going to be massive consolidation in the financial services space. We spoke with our shareholders about blockchain use cases we thought might exist such as trade finance, cross border payments or foreign exchange for our bank. The time spent understanding the technology enabled us to be agile enough to pivot and to prioritize cryptocurrencies
Brett: You’ve brought some world class partners to the table like Coinbase, which is the largest US exchange, and also SAP. What can you about those partnerships, and how you brought everyone together to pull this off?
Scrivner: As you can imagine, implementing this technology is not easy for a relatively small bank. SAP is historically at least thought of as one of the largest companies in the world who services the financial services industry. They believed in what we’re doing and have been tremendous partners. With Coinbase, that 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 clients and different types of clients. And they have continued to be a really good partner in terms of referrals in terms of encouraging folks to talk with us about the custody opportunity.
Brett: What type of market research did you do before launching into cryptocurrency?
Scrivner: A Gallup poll, and our own internal surveys, showed us that more than 60 percent of individuals are at least interested in crypto – what I like to describe as ‘crypto curious’. But they’re also saying we want to have a bank involved with our custody of cryptocurrency. After our February announcement of our successful test, we had a substantial “whale” in the industry contacted us because they were specifically waiting for a national bank to get involved in it.
And why is that? Well, we’re highly regulated, we’re going to do the right things. We’re going to do our audits, we’re going to do the due diligence that is appropriate for a national bank to get involved in. I can get up on my soapbox on this thing, really quickly. This is why the defi world ought to be embracing this and we need to be working together, right? There’s lots of different customers out there from sophisticated that may want to control everything and have their own wallet, and pass codes, all the way to those that are ‘crypto curious’ and may 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 safe and sound.
Brett: Can you tell us a little bit about the suite of services that people can now enjoy at your bank?
Scrivner: We have launched crypto services for individuals as a ‘self service’ capability. When customers fund a normal bank account, you have the ability to purchase eight cryptocurrencies, just by signing up for that account. When you ask about custody and exchange, you can buy, you can sell, and you can store those eight crypto currencies by opening a single bank account. Now, technically behind the scenes, each one of those cryptocurrencies is in another account, but it is shown on your mobile device so that you understand what you have in each one of those coins – but it is settling and coming directly out of your bank account. So there’s instant settlement into your checking account when you sell the cryptocurrencies or instant settlement to purchase the cryptocurrency as well.
Brett: What are the eight cryptocurrencies that your bank offers?
Scrivner: Bitcoin, Ethereum, Cardano, Filecoin, Litecoin, Orchid, Algorand and Bitcoin Cash.
Brett: If I had Bitcoin that I had purchased already, could I transfer that over and have Vast Bank be the custodian?
Scrivner: Not yet. This is on our roadmap and we are actively working on it. And I promised my team I wouldn’t give a timeframe on this – I’d love to give a time frame. But you are a former regulator so you understand – a lot of people don’t get it. We are required to understand the source of funds at a bank. All funds goes through the KYC process and our BSA and AML program making sure we have an understanding of the type of activity to expect in an account. If we think about the Poly network hack that just happened. The part of this that is of most interest to me is that evidently, that person was involved in the KYC process somewhere, right? And because of the nature of the blockchain, all of a sudden there was traceability to be able to identify that person. So that if it was a bad actor, he was forced, let’s say to return. There are other instances where the coins have disappeared and things like that. We as a regulated entities are committed to doing the right thing. Part of that is understanding where those coins come from. And in order to do that, we have to have tools in place, and people in place to be able to do the right KYC/ BSA /AML activity. And in order to do that, we have to have the tools in place to analyze the chain. That’s the process, we’ve already got our partners selected, we’ve got the contracts in place. We are standing up this program, but as you know, there’s a a big difference between deciding to do something and operationalizing it and putting it at scale. There are a lot of new high net worth folks and let’s face it, some of the early adopters right are walking around and I don’t know how they sleep at night, you know, with their wallets, right? It’s the equivalent of, you know, the potential for their house to burn down. And all their money is stored underneath the mattress. You know, that’s why there’s so much interest in a national bank coming into play. People are tired of burying their money basically in the backyard and are fearful it’s gonna get stolen or whatever the case may be.
Disclosure: I hold Bitcoin in my financial portfolio and also serve as an advisor to Metallicus, Inc.
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