Custodia Bank, a Wyoming-based institution known for its crypto services and lack of FDIC insurance, is appealing a lower court’s decision denying its attempt to join the U.S. banking system. The bank wants a federal appeals court to review Judge Scott Skavdahl’s dismissal of their request for a Federal Reserve master account.
On April 26, Custodia Bank announced its intention to appeal the ruling from early March by filing an appeal notice. This decision was made in response to a lower court’s rejection of their application to become an official member of the US banking system.
A bank based in Cheyenne, Wyoming is asking a higher federal court to reconsider a judgment made by Judge Scott Skavdahl. In this case, Judge Skavdahl refused the application of Custodia for a master account with the Federal Reserve in the United States.
As a crypto investor, I can explain that having a master account with a bank grants me expanded privileges, allowing my financial institution direct access to Fed services such as the Automated Clearing House (ACH) network. This enables smoother and more efficient electronic funds transfers between different accounts, simplifying payment processes for me.
Furthermore, Custodia is challenging the cost proposal put forward by one of the defendants, the Federal Reserve Bank of Kansas City. The estimated cost totals $25,728.25 for obtaining the deposition transcripts.
In the argument made by Custodia, they propose waiting until after the appeal has been resolved before determining the cost issue. They support this suggestion with a reference to a previous case where expenses were not assessed until later in the legal process.
On March 29, the court determined that Custodia Bank did not qualify for a master account with the Federal Reserve (Fed) and denied their request for a writ of mandamus. This legal action would have compelled the Kansas City Fed to consider Custodia’s application more thoroughly. Subsequently, Custodia’s petition for review was dismissed.
The court found that banks do not have a legal right to hold master accounts just because they can apply for them. Additionally, it was decided that Custodia failed to provide sufficient evidence showing that the Federal Reserve Board of Governors had made a definitive denial of their application.
The court determined that it didn’t have the authority to hear Custodia’s case because no final decision had been made.
Custodia Bank, recognized for its expertise in cryptocurrency offerings and without FDIC coverage, argued that the Federal Reserve’s lengthy delay and ultimate rejection of their application were unjustified and against the Administrative Procedure Act.
The act oversees the processes federal agencies must follow in rule-making and enforcement.
As the CEO of Custodia, I will be leading our team in appealing the recent court decision, in accordance with the court order.
Long contended that past rulings granted the Federal Reserve excessive autonomy in refusing to open new master accounts and closing existing ones for banks like Custodia. She emphasized that this wasn’t an isolated incident affecting only Custodia.
According to my findings from crypto.news, on November 7th, Long unveiled Custodia’s Bitcoin custodial service following Wyoming Division of Banking’s approval.
As a business analyst, I would rephrase it this way: I help businesses such as fiduciaries and fund managers by improving their operational effectiveness and minimizing risks.
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2024-04-28 17:24