The Federal Reserve Board has denied custodiabank’s membership application, claiming Custodia’s “novel business model and proposed focus on crypto-assets presented significant safety and soundness risks.” cheyenneligon reports
The U.S. Federal Reserve Board has denied Custodia Bank’s application for membership, claiming the crypto-focused institution’s “novel business model and proposed focus on crypto-assets presented significant safety and soundness risks.”
“Custodia’s risk management framework was insufficient to address concerns regarding the heightened risks associated with its proposed crypto activities, including its ability to mitigate money laundering and terrorism financing risks,” the Fed added.“Custodia is surprised and disappointed by the Board’s action today,” Caitlin Long, Custodia’s CEO,.
“Custodia offered a safe, federally regulated, solvent alternative to the reckless speculators and grifters of crypto that penetrated the U.S. banking system with disastrous results for some banks,” Long continued. “Custodia actively sought federal regulation, going above and beyond all requirements that apply to traditional banks.”
The Wyoming-based bank’s application for a master account – which gives an institution direct access to the Federal Reserve’s payment systems and thus the ability to settle transactions with other lenders via central bank reserves – is still pending. It was initially filed in October 2020., alleging the central bank was unlawfully delaying its decision – which has a statutory deadline of 12 months – on Custodia’s application for a master account.
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