Digital asset bank Custodia filed a notice of appeal Friday after a Wyoming judge ruled last month that the bank was ineligible to hold a Federal Reserve master account.
Custodia’s lawyers filed the notice in U.S. District Court for the District of Wyoming, marking the latest move in a years-long debate over whether banks have access to central bank payments systems.
in Referee In a March filing, Judge Scott Skavdahl said the Federal Reserve has discretion on whether to grant a master account. These master accounts give institutions direct access to the Federal Reserve’s clearing system and the most direct access to the U.S. money supply available to financial institutions. Those without a master account often have to rely on partner banks that do have a master account to provide services.
“If Custodia’s position is correct, it means that every depository institution licensed under state law, regardless of how soundly structured, is entitled to a master account with direct access to the federal financial system,” the judge wrote. said. Last month’s ruling.
long road
Custodia, founded by Wall Street veteran Caitlin Long, filed a master account application with the Kansas City Federal Reserve in 2020. In the spring of 2021, the Federal Reserve stepped in and sought control over the decision-making process.
Then Custodia be sued In 2022, the Federal Reserve and the Federal Reserve Bank of Kansas City were accused of delaying decisions on applications for central bank master accounts.
Custodia’s master account request was later denied in January 2023.
Custodia is a special purpose depository institution, a bank that is governed by Wyoming law and can accept and store deposits. However, according to Custodia, they cannot lend out “customer notional deposits” and must hold 100% of those deposits in reserves. Website.
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About the author
Sarah is a reporter for The Block covering policy, regulation and legal events. Sarah was previously a reporter writing about securities regulation at CQ Legal, where she first began her reporting on cryptocurrencies. She Sarah has also written for The Bond Buyer and American Banker, among other financial publications. She graduated from the University of Missouri with a degree in Print and Digital Journalism. Sarah lives in Washington, DC and she is an avid coffee lover. You can follow her on Twitter @ForTheWynn.