Custodia Bank Appeals Court Decision, Seeks Integration into U.S. Banking System
Summary:
Custodia Bank has submitted an appeal to the U.S. Tenth Circuit Court of Appeals, disputing a previous court's denial of its effort to become part of the U.S. banking system. The bank, established by early Bitcoin advocate Caitlin Long, emphasizes that a lack of a Federal Reserve master account restricts its ability to provide custodial services for digital assets, thereby affecting its competitiveness. The lender is also contesting a cost recovery bill proposed by the Federal Reserve Bank of Kansas City in a separate legal document.
Custodia Bank has lodged an appeal with the Tenth Circuit Court of Appeals in the U.S., contesting a verdict by a lower court in March that denied its bid to be incorporated into the American banking system. A court filing from April 26 shows that the bank is calling for a federal appellate court to reconsider a verdict handed down by Judge Scott Skavdahl from Wyoming's District Court. The verdict ordered a denial of Custodia's application for a U.S. Federal Reserve main account.
This type of account is held by a financial establishment directly with the Federal Reserve Bank. Owning this type of account allows banks to utilise services provided by the Federal Reserve like Fedwire and the Automated Clearing House network for digital payments. Fedwire oversaw approximately 196 million transfers in 2022, which collectively totaled over $1 quadrillion.
The brainchild of Caitlin Long, a previous Morgan Stanley executive and Bitcoin pioneer, Custodia Bank was established in 2020. Its primary goal was to cater to cryptocurrency businesses, providing them with account services and functioning as a medium to the U.S. dollar.
In October 2020, an application was submitted by Custodia for a Federal Reserve main account. Close to two years later, in June 2022, there was legal action against the Fed on the grounds of an "unlawful delay" in the processing of the application. However, in 2023, the Fed turned down the membership application, pointing out that Custodia's interaction with the cryptocurrency sector "did not meet the set legal standards." More recently, Judge Skavdahl did not approve of the bank's account request on March 29, thereby turning down its plea for a declaratory judgment.
Custodia contends that the absence of a main account hampers its ability to offer the same custodial services for digital assets as other banks, damaging its competitive edge. A number of U.S. banks, including the Bank of New York Mellon, offer custody of digital assets.
Additionally, Custodia has challenged a bill of costs proposed by the Federal Reserve Bank of Kansas City in a distinct filing. This bill seeks payment of $25,728.25 for deposition transcript costs, but Custodia states that these costs shouldn't be charged at the current stage of the legal proceedings.
Published At
4/26/2024 10:13:02 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.