Custodia,
a
Wyoming-based
crypto
bank,
filed
a
notice
of
appeal
against
a
court
ruling
that
affirmed
the
Federal
Reserve’s
rejection
of
its
bid
for
a
master
account.
A
federal
judge
ruled
last
month
that
the
Kansas
City
Fed
had
the
discretion
to
reject
Custodia’s
bid
for
a
master
account.
Custodia,
according
to
the
court,
had
not
provided
sufficient
evidence
to
back
up
accusations
that
the
Fed’s
Board
of
Governors
was
illegally
leaning
on
the
Kansas
City
branch
to
reject
the
bank’s
bid
for
the
master
account
which,
if
granted,
would
let
Custodia
directly
access
the
Fed
and
not
need
intermediary
banks.
The
ruling
came
years
after
Custodia
first
filed
suit,
alleging
the
Fed
had
taken
too
long
to
make
a
decision.
The
company
helmed
by
Caitlin
Long,
who
helped
draft
Wyoming’s
special
purpose
depository
institution
law,
later
refiled
the
suit
after
the
Fed
formally
denied
its
master
account
application.
“Unless
Federal
Reserve
Banks
possess
discretion
to
deny
or
reject
a
master
account
application,
state
chartering
laws
would
be
the
only
layer
of
insulation
for
the
U.S.
financial
system,”
Judge
Scott
Skavdahl
wrote
last
month.
“And
in
that
scenario,
one
can
readily
foresee
a
‘race
to
the
bottom’
among
states
and
politicians
to
attract
business
by
reducing
state
chartering
burdens
through
lax
legislation,
allowing
minimally
regulated
institutions
to
gain
ready
access
to
the
central
bank’s
balances
and
Federal
Reserve
services.”
At
the
time,
a
Custodia
spokesperson
said
the
company
was
reviewing
the
ruling.
Custodia
also
filed
an
objection
to
the
Fed’s
attempt
at
collecting
legal
fees,
arguing
both
that
the
case
was
ongoing
due
to
the
appeal
and
that
granting
the
fees
might
“chill”
future
lawsuits
by
companies
against
government
or
quasi-government
entities.
CORRECTION
(April
26,
2024,
18:30
UTC):
Corrects
that
the
court
ruled
on
Custodia’s
master
account
application.
