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A US appellate court has ruled against Custodia Bank, the crypto-friendly institution founded by Caitlin Long, upholding the Federal Reserve’s decision to deny the bank a master account. In a recent judgement by the US Court of Appeals for the Tenth Circuit, three judges affirmed the lower court’s ruling in the District of Wyoming, delivering another blow to Custodia’s efforts since its initial application in October 2020.

The master account would have granted Custodia access to the Federal Reserve’s payments network, a critical infrastructure used by the US government and authorized financial institutions. However, the Federal Reserve Bank of Kansas City rejected the application in 2023, citing risks related to Custodia’s focus on digital assets that conflicted with safe banking practices.

Custodia challenged the Fed’s delays in court, filing a lawsuit in 2022 over what it described as an unlawful delay in processing its application. After the appeals court decision, Custodia stated it is actively considering petitioning for a rehearing, pointing to a significant dissent in the ruling that raised serious constitutional questions concerning the Fed’s authority.

Founded as Avanti in Wyoming under a pro-blockchain regulatory climate and rebranded to Custodia in 2022, the bank’s struggle highlights the ongoing tensions between innovative crypto banking models and traditional regulatory frameworks. The case underscores the challenges digital asset-focused banks face in gaining full integration within the federal banking system.

For more details, read the full article here: https://cointelegraph.com/news/custodia-crypto-bank-appeal-federal-reserve-master-account

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Caitlin Long’s Crypto Bank Faces Setback as Appeals Court Upholds Federal Reserve Master Account Denial