Custodia Bank is appealing to the US Tenth Circuit Court of Appeals after being denied entry into the US banking system in March.
Custodia Bank has petitioned the United States Tenth Circuit Court of Appeals for a notice of appeal, contesting a lower court’s March ruling denying the bank’s application to integrate into the U.S. banking system formally.
The bank filed a petition with the court on April 26th, requesting that a decision rendered by Judge Scott Skavdahl of the District Court for the District of Wyoming be reviewed by an appeals court at the federal level. Custodia’s application for a Federal Reserve master account in the United States was denied by the decision.
Master accounts with the Federal Reserve are maintained directly with the Federal Reserve Bank by a financial institution. Banks with a master account are granted access to Federal Reserve services for electronic payments, including Fedwire and the Automated Clearing House (ACH) network. Fedwire processed an estimated 196 million transfers in 2022, with a combined value exceeding $1 quadrillion.
Former Morgan Stanley executive and early proponent of Bitcoin Caitlin Long established the bank in 2020 to facilitate account services for cryptocurrency firms and serve as a conduit to the United States dollar.
Custodia requested a primary account with the Federal Reserve in October 2020. The bank filed suit against the Fed in June 2022, nearly two years later, alleging an “unlawful delay” in processing its application.
The Fed denied the membership application in 2023 because the bank’s participation in the cryptocurrency industry was “incongruous with the legally mandated factors.” As of March 29th, Judge Skavdahl decided to reject the bank’s request for a declaratory judgment and deny the establishment of an account.
According to Custodia Bank, its efficacy is diminished as it cannot offer equivalent custodial services for digital assets as other banks due to the absence of a master account. Digital asset custody is provided by several U.S. institutions, including the Bank of New York Mellon.Â
The bank objects to a bill of costs submitted by the Federal Reserve Bank of Kansas City in a distinct filing. The receipt requests reimbursement for deposition transcript expenses totaling $25,728.25. Custodia posits that allocating these costs at this juncture of the legal proceedings is inappropriate.
