Custodia Bank has filed a notice of appeal with the United States Tenth Circuit Court of Appeals, contesting a ruling from March that denied its bid to become part of the U.S. banking system. The appeal seeks a review of Judge Scott Skavdahl’s decision from the District Court for the District of Wyoming, which rejected Custodia’s request for a Federal Reserve master account in the United States.
Federal Reserve master accounts allow financial institutions direct access to services like Fedwire and the Automated Clearing House (ACH) network for electronic payments. In 2022, Fedwire processed over 196 million transfers valued at more than $1 quadrillion. Custodia Bank’s quest for a master account is pivotal for its operations, particularly in providing custodial services for digital assets and competing effectively in the market.
Founded in 2020 by Caitlin Long, Custodia Bank aims to offer account services for crypto firms and facilitate access to the U.S. dollar. The bank applied for a Federal Reserve master account in October 2020 but faced delays. In June 2022, Custodia sued the Fed, citing an alleged “unlawful delay” in processing its application. Despite this, the Fed rejected the membership application in 2023, citing inconsistencies with legal requirements.
The lack of a master account impedes Custodia Bank’s ability to provide custodial services for digital assets, limiting its competitiveness. Unlike Custodia, several U.S. banks, such as the Bank of New York Mellon, offer custody services for digital assets.
In addition to the appeal, Custodia Bank is contesting a bill of costs submitted by the Federal Reserve Bank of Kansas City, seeking reimbursement for deposition transcript costs totaling $25,728.25. Custodia argues against awarding these costs at this stage of the legal proceedings.
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