Custodia Bank has expressed its disappointment with the dismissal of its request to join the Federal Reserve System. The Fed denied the institution’s application citing that the application did not comply with factors laid out by the U.S. financial regulations.
Fed rejects Custodia Bank’s application
The Federal Reserve has reportedly denied Custodia Bank’s application to join the Federal Reserve System. According to reports, the Fed’s denial cited that the application was not fully compliant with U.S. regulations.
The Fed also claimed that the bank lacked sufficient management to see its application and practicability. Although the request was denied, the firm still has a pending Master Account application, according to a tweet issued by the bank.
The Fed Reserve system oversees U.S. monetary policy through the management of interest rates and the cost and credit in the economy.
If the application went through, it would spearhead Custodia bank’s reforms in the crypto world. The Fed gave Custodia 72 hours to withdraw the rejected application.
However, the Master Account application had remained in the queue since 2020, when it was first forwarded to the Fed for approval. Custodia bank, previously known as Avanti sued the Federal Reserve for unacceptable delays in the account approval process.
Custodia also assured users that the legal process will continue to intensify and that it “has raised about the Federal Reserve’s handling of its application, an issue we will continue to litigate.”
In August last year, the Fed issued revised guidelines to conform with before banks were given the so-called “Master Account”. The procedures proved to be a steep mountain for crypto-oriented banks like Custodia to climb through during its pursuit of the Master Account.
Source: https://crypto.news/fed-denies-custodia-bank-federal-reserve-system-access/