“`html
Custodia Bank, the well-known cryptocurrency institution established by Caitlin Long, has encountered another judicial obstacle in its pursuit of a Federal Reserve master account. Remarkably, the Wyoming-based organization could not obtain a beneficial appeal verdict following an initial court dismissal in March 2024.
Appeals Court Affirms Fed Decision In Custodia Matter
In 2020, Custodia Bank submitted a request to the Federal Reserve Bank of Kansas City (FRBKC) seeking a master account, which would provide the crypto-oriented institution direct access to the Federal Reserve’s payment framework, permitting it to function without depending on intermediary banks.
Nevertheless, the request was denied in 2023, with the FRBKC referencing worries regarding banking practices. This ruling followed Custodia’s previous filing of a lawsuit against the Federal Reserve in 2022, accusing the regulator of an “illegal delay” in evaluating its application.
In March 2024, the notable crypto bank legally contested the Fed’s ruling, asserting that the central bank lacked the legal power to reject its master account request. The bank also alleged that the Federal Reserve Board of Governors may have engaged in collusion with the Kansas City Fed to orchestrate the denial.
Judge Scott Skavdahl of the US District Court for the District of Wyoming rejected Custodia’s assertions, determining that federal law does not require the Federal Reserve to grant a master account to each qualified institution. He confirmed that the Fed retains broad authority in deciding whether to approve or deny such requests.
This judgment was followed by an appeal at the 10th Circuit Court of Appeals in April 2024. Nineteen months thereafter, the Appellate court has now sustained the lower court’s decision, endorsing the Fed’s discretion in granting a master account or not, irrespective of eligibility.
The ruling stated:
We concur with the district court that “[t]he straightforward wording of the relevant statutes can only reasonably be interpreted to provide the Federal Reserve Banks discretion in approving or denying applications for master accounts.” Custodia Bank, 728 F. Supp. 3d at 1245. Hence, we determine that Custodia is not statutorily and automatically entitled to a master account. We RATIFY the district court’s verdict in favor of Defendants on all claims.
What Lies Ahead For Custodia?
In a reply to the judicial verdict, Custodia suggested a possible petition for rehearing, referencing a strong dissenting opinion from one of the appeals court judges.
The statement expressed:
While we were optimistic about a victory at the Tenth Circuit today, we received the next best alternative — a compelling dissent. It raised significant Constitutional inquiries regarding the Federal Reserve and was composed by a judge serving by designation on the panel of a similar case in the Ninth Circuit. Alongside Judge Bacharach’s opinion in the Fourth Corner case, there’s now a 2–2 division on this matter among Tenth Circuit judges (2–1 in Custodia’s favor among active Tenth Circuit judges). Custodia has the option to seek a rehearing by the Tenth Circuit, and we are actively contemplating that.
At press time, the total cryptocurrency market capitalization remains valued at $3.68 trillion following a 2.65% increase.
Featured image from Fox Business, chart from Tradingview
Editorial Procedure for bitcoinist is focused on providing thoroughly researched, precise, and impartial content. We maintain rigorous sourcing standards, and each page is subject to meticulous review by our team of leading technology specialists and experienced editors. This method ensures the reliability, relevance, and significance of our content for our audience.
Source link
“`
