US Federal Reserverejected the application of Custodia Bank, an investment bank that provides digital asset services, to become a member of the system. The Central Bank said in a statement that Custodia did not meet the necessary conditions to join the system.
FED emphasized that besides the financial conditions, the bank’s management staff were insufficient to become a member of the system. After the official announcement Custodia Bankshared the event on his Twitter account:
STATEMENT FROM CUSTODIA BANK about today’s Federal Reserve action on its membership application. Its master account application remains pending: pic.twitter.com/QkMjcT508J
— Custodia Bank ™ (@custodiabank) January 27, 2023
“The US Federal Reserve published this text as a justification after the FED rejected our application.”
After Custodia shared its application rejection, it announced that the bank’s main account application is still pending. Founded by Caitlin Long, Custodia Bank applied to the Fed in 2020 for the main account. The bank filed a lawsuit against the FED in June 2022 due to the delay in the process.
The digital asset bank claims that even though it meets all the requirements for the main account, the Fed deliberately prolonged the process. The FED, on the other hand, stated in a statement in August that it is conducting a detailed review process for newly active banks.
The Federal Reserve gave its first approval for the crypto custody service in October. BNY Mellon made history as the first major bank to offer its customers government-approved digital asset storage.
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