Custodia, digital asset bank, is facing difficulties accessing the U.S. banking system. According to the company, the Federal Reserve (Fed, the U.S. central bank) took two years to evaluate a request for approval of a master account in the country’s financial system.
The delay in evaluating the application has caused Custodia Bank to file a lawsuit in the U.S. courts. The digital bank claims that the Board of Directors of the Fed, located in Kansas, acted with “disrespect” and “favoritism.”
On the other hand, the Fed claims that the custody of crypto assets poses financial risks, and therefore the digital bank’s request may not have been considered by the board. However, Custodia Bank says in the lawsuit that another financial institution got approval for crypto assets custody.
Crypto assets Custody in the U.S.
Custodia Bank, formerly Avanti Bank, is a digital bank that offers the custody of crypto assets. To access the U.S. banking system, the company applied to the Fed for a permit in 2020.
With no answers to the request, the bank points out that the Fed board acted with “favoritism” in allowing another institution to offer crypto custody and maintain a master account simultaneously.
The master account will allow Custodia Bank direct access to the banking system, without needing intermediaries to complete dollar transactions, for example. But because it offers crypto assets custody, the digital bank does not have this authorization.
Until then, Custodia Bank claimed that BNY Mellon bank, with a master account, got approval from the Fed to offer crypto assets custody. But, the Fed’s board stated that the approval was recently suspended.
Custodia Bank has attached BNY Mellon’s crypto assets custody announcement in the lawsuit. The U.S. Court of Appeals will still review the case in Wyoming.