Custodia Bank’s Appeal Denied In Battle Over Fed Master Account – Details
Custodia Bank, the favored crypto financial institution based by Caitlin Long, has suffered one other courtroom setback in its struggle for a Federal Reserve grasp account. Notably, the Wyoming-based establishment didn’t safe a good attraction ruling after an preliminary courtroom rejection in March 2024.
Appeals Court Upholds Fed Decision In Custodia Case
In 2020, Custodia Bank filed an software with the Federal Reserve Bank of Kansas City (FRBKC) in search of a grasp account, which might grant the crypto-focused establishment direct entry to the Federal Reserve’s fee system, permitting it to function with out counting on middleman banks.
However, the appliance was rejected in 2023, with the FRBKC citing considerations over banking practices. This resolution got here after Custodia had already filed a lawsuit towards the Federal Reserve in 2022, accusing the regulator of an “illegal delay” in processing its software.
In March 2024, the favored crypto financial institution legally challenged the Fed’s resolution, arguing that the central financial institution lacked the authorized authority to disclaim its grasp account software. The financial institution additionally accused the Federal Reserve Board of Governors of attainable collusion with the Kansas City Fed in orchestrating the rejection.
Judge Scott Skavdahl of the US District Court for the District of Wyoming dismissed Custodia’s claims, ruling that federal regulation doesn’t mandate the Federal Reserve to grant a grasp account to each eligible establishment. He affirmed that the Fed retains broad discretion in deciding whether or not to approve or deny such functions.
This ruling was adopted by an attraction on the tenth Circuit Court of Appeals in April 2024. Nineteen months later, the Appellate courtroom has now agreed with the decrease courtroom, upholding the Fed’s discretion in granting a grasp account or not, no matter eligibility.
The ruling stated:
We agree with the district courtroom that “[t]he plain language of the related statutes can solely moderately be learn to offer the Federal Reserve Banks discretion in granting or denying requests for grasp accounts.” Custodia Bank, 728 F. Supp. 3d at 1245. Accordingly, we maintain that Custodia shouldn’t be statutorily and routinely entitled to a grasp account. We AFFIRM the district courtroom’s judgment in favor of Defendants on all claims.
What Next For Custodia?
In a response to the courtroom ruling, Custodia has hinted at a possible petition for rehearing, citing a robust dissenting opinion by one of many appeals courtroom judges.
The assertion learn:
While we had been hoping for a win on the Tenth Circuit immediately, we obtained the following neatest thing — a robust dissent. It raised critical Constitutional questions concerning the Federal Reserve and was written by a choose sitting by designation on the panel of the same case within the Ninth Circuit. Including Judge Bacharach’s opinion within the Fourth Corner case, there’s now a 2–2 cut up on this query amongst Tenth Circuit judges (2–1 in Custodia’s favor amongst energetic Tenth Circuit judges). Custodia has an choice to petition for a rehearing by the Tenth Circuit, and we’re actively contemplating that.
At press time, the entire crypto market cap stays valued at $3.68 trillion following a 2.65% acquire.
