Home
News
Custodia Bank, embroiled in a felony conflict for inclusion inside the U.S. banking system, has taken a sizable leap forward with a notice of attraction it filed with the United States Tenth Circuit Court of Appeals.
The argument aims to undertake a ruling made by Judge Scott Skavdahl of the District Court for the District of Wyoming in March, which denied Custodia Bank’s bid to attain a Federal Reserve master account, a critical gateway to having access to Federal Reserve offerings.
Why Custodia Bank Desires To Be Part Of U.S. Federal Banking System?
A Federal Reserve master account is an important tool for monetary institutions, granting direct access to Federal Reserve Bank services along with Fedwire and the Automated Clearing House (ACH) network and facilitating electronic payments.
These services are essential to the functioning of the monetary tools, with Fedwire itself processing about 196 Million transfers in 2022, totaling over $1 Quadrillion.
Caitlin Long, a former government authority who also served at Morgan Stanley and an outstanding advocate for Bitcoin, founded Custodia Bank in 2020 with the vision of providing master account offerings for crypto corporations and serving as a bridge to the United States dollar. However, Custodia’s journey to integration into the U.S. banking system has been fraught with challenging legal hurdles.
The saga started out in October 2020, while Custodia implemented a Federal Reserve Master account. After almost two years of waiting, the bank took criminal action in opposition to the Fed in June 2022, bringing up an alleged “unlawful putoff” in the processing of its application.
Reason and Impact of Not Getting Positive Response
Despite these efforts, the Fed rejected Custodia’s membership software in 2023, bringing up worries that the financial institution’s involvement in the crypto space was not aligned with the required regulatory standards.
The latest ruling by Judge Skavdahl on March 29 dealt another blow to Custodia Bank’s aspirations. The decision sided with the Fed, denying Custodia’s plea for a Federal Reserve master account and dismissing its request for a declaratory judgment.
This decision has massive implications for Custodia, as it drives the bank’s ability to offer custodial services for digital property, bringing it at a competitive disadvantage as compared to other banks within the U.S. that offer identical services.
One such example is the Bank of New York Mellon, which provides custody services for digital assets. Custodia Bank argues that without a master account, it is not possible to provide the identical level of custodial services, hampering its ability to compete successfully in the marketplace.
In addition to the court’s selection, Custodia Bank is likewise offering a bill of charges submitted with the useful resource of the Federal Reserve Bank of Kansas City. The invoice seeks repayment for deposition transcript fees totaling $25,728.25. Custodia asserts that those prices need to no longer be offered at this degree of the legal complaints, including some other layer of complexity to the ongoing legal dispute.
As Custodia Bank continues its fight for inclusion within the U.S. banking machine, the final results of its attraction with the Tenth Circuit Court of Appeals incorporate sizable implications not only for the bank itself but additionally for the wider crypto industry.
The case underscores the demanding situations facing economic establishments operating inside the crypto space and raises questions about the criteria for inclusion in traditional banking.
While Custodia Bank remains undeterred in its pursuit of a Federal Reserve master account, the path ahead is unsure. As the criminal lawsuits unfold, stakeholders throughout the monetary and crypto sectors might be closely watching to see how this landmark case shapes the future of banking and digital asset custody within the United States.
Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.
