As a crypto investor with a background in traditional finance, I’ve seen firsthand how crucial access to the banking system is for businesses operating in the digital asset space. Custodia Bank’s ongoing legal battle to obtain a Federal Reserve master account is an issue that directly impacts me and many others in this growing industry.
I’ve learned that Custodia Bank has announced its intent to file an appeal with the United States Tenth Circuit Court of Appeals against the lower court’s decision from March, which declined our application to become an official member of the US banking system.
Based on a document submitted to the court on April 26, the bank is asking the federal appeals court to reconsider a ruling made by Judge Scott Skavdahl of the Wyoming District Court. In this ruling, Judge Skavdahl denied Custodia’s application for a Federal Reserve master account in the US.
Financial institutions maintain master accounts with the Federal Reserve Bank, enabling them to utilize Federal Reserve services like Fedwire and the Automated Clearing House (ACH) network for executing electronic payments. In the year 2022 alone, Fedwire facilitated around 196 million transfer transactions, totaling over one quadrillion dollars in value.
In 2020, Caitlin Long, a former Morgan Stanley executive and an early advocate for Bitcoin, established a new bank with the mission to offer banking services to cryptocurrency companies and serve as a connection between the digital currency world and the US dollar.
In October 2020, I, Custodia, submitted an application to the Federal Reserve for a master account. However, almost two years later, in June 2022, I found it necessary to file a lawsuit against the Fed, claiming that they had unlawfully delayed the processing of my application.
In 2023, the Federal Reserve denied the bank’s membership application, stating that their activities in the crypto sector went against the necessary legal criteria. More recently, on March 29, Judge Skavdahl refused to open an account for the bank and dismissed their request for a declaratory judgment.
Custodia Bank admits that not having a master account is an impediment, preventing them from offering the same level of digital asset custodial services as their competitors. For instance, banks like the Bank of New York Mellon in the U.S. currently provide such services.
As an analyst, I would put it this way: In a separate document, our bank contests the bill for costs submitted by the Federal Reserve Bank of Kansas City. This bill requests reimbursement totaling $25,728.25 for deposition transcript fees. However, we believe these costs should not be granted at this point in the ongoing legal proceedings.
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2024-04-26 22:16