Crypto Bank Custodia Denied Membership in the US Federal Reserve System
Crypto bank Custodia has been denied membership of the United States Federal Reserve and in an announcement dated January 27 the Federal Reserve body clarifies that the application as submitted by the company is inconsistent with the rule of law and all its Does not comply with the type requirements. The press further states that the Custodia is a special purpose depository institution that is not federally insured and seeks to engage in “unapproved crypto activities”, including the issuance of cryptocurrencies.
The Board argued that the Farm’s novel business model and proposed focus on crypto assets presented significant and evolving security and soundness risks. The Federal Reserve Board recalled that it previously determined that these types of activities were likely to be safe and consistent with good banking practices, and that the bank’s risk management framework and the financing of money laundering and With the potential to address the problem of terrorism, “there was not sufficient judgment to address relevant concerns”, and in light of these concerns the application of the form presented was consistent with factors that needed to be assessed at Board level The statement concluded that this order would be issued only after reviewing the confidential information.
Membership in the Federal Reserve system, for example, was intended to provide Custodia, a bank chartered by the state of Wyoming, with certain advantages regarding taxation and investments, and in a tweet statement CEO Caitlin Long says the company was surprised and upset by the board’s move. was disappointed and asserted that Custodia has created a safe and secure environment in favor of crypto holders and against reckless speculators entering the US banking system and playing with crypto, with disastrous consequences for some banks. Federally-regulated, solvent options were offered. Long emphasized that Custodia actively sought a regulation that went above and beyond all requirements applicable to traditional banks, and also noted that the company has submitted its application to the Federal Reserve. This is in line with raising concerns about handling and has vowed that it will continue to pursue the issue. The executive was referring to a lawsuit against the central bank system’s pending decision on its application for the master account. The latter remains pending as the company explained while banks hold most of the reserves in master accounts at the Fed that allow them to send funds between each other and settle payments.
On Friday, the Federal Reserve Board issued a policy according to which both insured and uninsured banking institutions would be subject to limits on certain activities, including those involving crypto assets industries are also included.