Important News

• Custodia Bank has asked for summary judgement in its lawsuit against the United States Federal Reserve, a legal move sometimes indicating that the evidence it published during the earliest part of its lawsuit is so compelling that a trial is not needed.
• Custodia Bank Founder and CEO is Caitlin Long, a Harvard Law School graduate , and banker with 22 years of banking experience working for Credit Suisse, Morgan Stanley and Mellon Bank, and has owned bitcoin since 2012] is leading the bank during this fight,
• Custodia Bank is a rare breed of bank called a a Special Purpose Depository Entity, which acts simply as the custodian of your deposited money, doesn't engage in loaning your deposits or investing your deposits, and makes its money from customers only through fees.
• This means that unlike practically every other bank, which makes money on loans and investments of customers deposits, a non-lending banks customers funds are never at risk.
• 2023 was a year when several large banks went out of business due to their loans, and linvestments, and lost millions of dollars of customers funds. Rational people would think the fiunding aof a non-klending bank in such a climate would be met positively by Federal Banking Regulators.
• And in fact the bank claims that initial reviews by the Federal Reserve Bank were stellar.
• But when the news leaked that Custodia Bank planned to also custody bitcoin, like it custodied money, thus providing it's customers with the same secure way to hold their bitcoin as their cash, it is reported that it's former friends turned to enemies.
• It's its Federal Reserve Master Account application, a crucial piece in its journey towards financial viability was turned down, with the ironic statement that the bank could not be financially viable. i
• Bankers are polite people, who do not rock the boat, and never sue the Federal Reserve Bank, but Custodia Bank CEO Caitlin Long chose not to go quietly into the night to die. But instead she and her bank turned to fight.
• Ironically, several other custody banks, whose Federal Master Accounts were rejected have also decided to not go quietly into the night, and as if inspired, they are suing the Federal Reserve also.
• This is a historical event in Federal Reserve Banking history in the United States, as younger generation people, with 20 plus years experience in the banking system are trying to change the rules and create bridges or meeting points between the traditional banking system and the blockchain.
• Caitlin Long's very own words are that she wants to build a regulated, compliant bridge between cryptocurrency and the modern banking system, with a intense focus on regulatory compliance and safety.
• This should have been a time when the regulators rolled up their sleeves to work hand in hand with industry, as they should sghare the same goal.
• But it appears that something else got in the way of rational and logical thought.
• So instead of being a shining regulatory light, leading the banking industry into the light of progress and innovation, the Federal Reserve instead appears to have chosen to be dragged screaming and kicking into the future.
• Sad...
• Read more below.
  @shortsegments

Jan 17, 2024 -

Custodia Bank presents "Exhibit BS" in its lawsuit against the Fed

By Crystal Kim, author and creator of Axios Crypto Newsletter

A court battle between a novel bank that wants to do business in crypto and the Federal Reserve Board is coming to a head.
Zoom in: The central question in this case is whether a politically motivated Fed intervened in a process conducted by one of the reserve banks it oversees, wrongfully denying Custodia Bank a Fed master account.
The big picture: One major unresolved question that reared its head in 2023 relates to Operation Choke Point 2.0.
Crypto is arguing that it is being unfairly shut out from key services like banking, whereas bank regulators have justified their arm's-length stance, citing systemic risk.
A win for Custodia may not be a broader win for crypto, but could open the door for other banks that want to do business with the industry.
Catch up fast: The bank first sued in June 2022, saying the Kansas City Fed had taken months to decide on its master account application, though the process was supposed to take days.
Now, Custodia is arguing that it was held to different standards and subject to Kafkaesque bureaucratic processes, described as "a ploy to derail Custodia's master account application."
In December it filed for summary judgment, publishing evidence surfaced through discovery that would appear to prove that point.
Read the rest of the article here: Source

It's author is Crystal Kim, and she is a New York-based crypto reporter for Axios and author of the Axios Crypto newsletter.

Write her here: email. crystal.kim@axios.com
Source