The court rules that Custodia Bank is not entitled to hold a Federal Reserve master account.
A Wyoming court ruled against Caitlin Long’s Custodia Bank that the lender was not entitled to a Federal Reserve master account.
In a March 29 summary judgment, Judge Scott W. Skavdahl ruled that Custodia Bank had no legal right to the master account and would not be granted a writ of mandamus over the master account.
Custodia argued that the Federal Reserve Bank of Kansas City (FRBKC) should offer a master account simply because one can apply for one. Meanwhile, regulators argued they had the power to reject the request at their discretion.
The judge concluded that the plain language of the specific laws cited by Custodia supported FRBKC’s position. He pointed out that the law does not mention master accounts and does not require the Federal Reserve to provide master accounts to all eligible depository institutions.
Instead, the relevant provisions of the law are intended to ensure that certain services are available to member and non-member depository institutions, but not all depository institutions. The same section sets out the same fee schedule for both agencies.
Custodia cannot be challenged
The judge also noted that the board has not yet submitted a final agency decision on the matter. Custodia Bank argued that the specific email, in which the board said it had “no problem” with FRBKC rejecting the account, constituted a final agency decision.
The board successfully countered that the message was only a final agency decision to comply with Wyoming law and did not meet the legal test for a final agency decision.
According to the ruling, the court lacked jurisdiction to address Custodia’s claims because the bank was unable to prove that the action was the agency’s final decision.
guard answer
According to a statement obtained by FOX Business reporter Eleanor Terret, a Custodia Bank spokeswoman. said The company plans to review the ruling and decide its next steps.
The spokesperson added:
“Challenging the Fed’s strong-arm tactics has always been an uphill battle. But Custodia Bank remains committed to our vision. …
Custodia Bank describes itself as a digital asset payment and custody solution for business customers.
Custodia’s cryptocurrency activities are not related to the current case involving master accounts, but the Federal Reserve has confirmed concerns about cryptocurrencies in a related application to become a member of the Federal Reserve System.
The Board of Trustees and the Federal Reserve Bank of Kansas City denied Custodia’s request for membership and master account on January 27, 2023.