Custodia Bank, a financial institution founded by Caitlin Long in 2020 to serve crypto firms and facilitate transactions with the US dollar, has appealed a court’s decision denying its request to join the US banking system. The bank is seeking a review by the United States Tenth Circuit Court of Appeals regarding Judge Scott Skavdahl’s ruling in March, which dismissed Custodia’s application for a Federal Reserve master account. These accounts allow banks direct access to Federal Reserve services like Fedwire and the Automated Clearing House network for electronic payments. In 2022 alone, Fedwire processed more than $1 quadrillion worth of transfers, totaling approximately 196 million transactions.
Custodia Bank applied for a Federal Reserve master account in October 2020, but its application faced a significant delay. In June 2022, the bank decided to take legal action against the Fed, accusing them of unlawfully stalling the application process. In 2023, the Federal Reserve rejected the bank’s membership application, citing inconsistencies between the bank’s involvement in the crypto space and the legal prerequisites. On March 29, Judge Skavdahl ruled against granting Custodia Bank a master account and dismissed its plea for a declaratory judgment.
Without a master account, Custodia Bank claims that it cannot provide the same custodial services for digital assets as other banks, hindering its competitiveness. Unlike Custodia, several US banks, such as the Bank of New York Mellon, already offer custody services for digital assets. To make matters more complicated, Custodia Bank has objected to a bill of costs presented by the Federal Reserve Bank of Kansas City, which seeks reimbursement of $25,728.25 for deposition transcript expenses. The bank argues that these costs should not be awarded in the current stage of the legal proceedings.
Custodia Bank’s decision to appeal to the United States Tenth Circuit Court of Appeals reflects its determination to challenge the lower court’s ruling and pursue its goal of becoming an official member of the US banking system. In doing so, the bank aims to gain access to the Federal Reserve’s services, enabling it to enhance its operations and compete more effectively in the market. This appeal also highlights the ongoing legal and regulatory challenges faced by banks in the crypto industry, as they navigate the complex landscape and seek recognition within traditional financial systems.
What a shame that Custodia Bank’s application to join the US banking system has been denied. It’s frustrating to see such a promising institution face setbacks. 😞
It’s frustrating to see Custodia Bank face legal and regulatory challenges in their journey to become an official member of the US banking system. It seems like the crypto industry is constantly facing roadblocks.
The delay in Custodia Bank’s application process and subsequent rejection by the Federal Reserve is just another example of the challenges faced by crypto firms in the traditional financial system. We need more acceptance and understanding.
I can’t believe Custodia Bank’s application for a Federal Reserve master account has been delayed for so long. It’s concerning to see the system failing a legitimate institution.
The rejection of Custodia Bank’s membership application is a blow to their competitiveness. Other banks already offer custody services for digital assets, leaving Custodia at a disadvantage. ⚖️
Custodia Bank’s appeal to the United States Tenth Circuit Court of Appeals could pave the way for greater institutional acceptance of digital assets. This is a step towards bridging the gap between the crypto industry and traditional financial systems.
Kudos to Custodia Bank for not giving up on their goal despite the court’s ruling. Their determination is commendable, and I hope they find success in their appeal.