A notice of appeal was filed by Custodia Bank on April 26 in answer to a recent court decision. This comes after a lower court said in March that the bank’s attempts to officially join the U.S. banking system were rejected.
Custodia Bank, which is based in Cheyenne, Wyoming, wants the decision made by Judge Scott Skavdahl to be looked at again by a federal appeals court. Custodia asked for a Federal Reserve master account in the United States, but the judge turned him down. With this kind of account, banks can use important Federal Reserve services, like the Automated Clearing House network for making electronic transfers.
Custodia Bank Contests Court’s Ruling.
Custodia is also disputing a bill of costs sent by the Federal Reserve Bank of Kansas City, which is one of the defendants. This is in addition to disputing the court’s ruling on the master account. The bill, which is for $25,728.25, is for deposition records.
Custodia says that the decision about costs should be put off until after the appeals process. They point to an example of when costs were not decided so early on.
On March 29, the court said that Custodia Bank did not deserve a Fed master account. They also turned down a writ of mandamus that would have made the Kansas Fed look over the bank’s application. After that, Custodia’s request for review was turned down.
The court’s ruling was based on a few important points. To begin, it said that banks do not legally have the right to master accounts just because they ask for them. Second, Custodia didn’t show that the Federal Reserve Board of Governors had made a final decision about the rejection. Lastly, the court said it didn’t have the power to hear Custodia’s case because there hadn’t been a final decision.
Custodia Bank, which is known for its crypto services and not having FDIC insurance, said that the Federal Reserve’s long delay and final rejection of its application were unfair and violated the Administrative Procedure Act. This law sets the rules that government agencies must follow when making and enforcing laws.
CEO of Custodia Caitlin Long said that the bank would be appealing the court’s ruling. She also raised concerns about the Federal Reserve’s ability to refuse new master accounts without a reason. Long said that Custodia wasn’t the only one who was having trouble with these issues, which could have bigger effects on the banking business as a whole.
Custodia Bank launched its Bitcoin custody platform on November 7 after getting permission from the Wyoming Division of Banking. Businesses like fiduciaries and fund managers can use the tool to make their operations more efficient and reduce risk.
