The United States District Court for the District of Wyoming has made a decision regarding Custodia Bank’s plea for a U.S. Federal Reserve master account, denying the request and dismissing the bank’s plea for a declaratory judgment.
Despite the ruling, Custodia Bank asserts that it remains undeterred and is exploring all available options, including the possibility of an appeal.
The denial of a Federal Reserve master account, often referred to as a “bank account for banks,” poses challenges for Custodia Bank in offering custodial services for crypto-assets, placing it at a disadvantage compared to other banking institutions.
Judge Scott Skavdahl declared that Custodia is not entitled to overturn the decision of the Federal Reserve Bank of Kansas City (FRBKC) and compel the issuance of a master account.
Custodia Bank submitted an application for a Federal Reserve master account in October 2020 to gain access to the Fedwire network, a critical system for financial transactions. However, the Fed rejected the application in January 2023, citing concerns over Custodia’s involvement in the crypto space.
Custodia Bank was among the pioneering Special Purpose Depository Institutions (SPDIs), also known as “blockchain banks,” established in Wyoming to assist businesses engaged in crypto-related activities. These institutions aimed to provide banking services to entities unable to secure traditional banking services due to their crypto dealings.
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