Fed denies Custodia Bank application to join the Federal Reserve System

Published at: Jan. 27, 2023

The Federal Reserve Board has rejected Custodia Bank’s application to become a member of the Federal Reserve System. In its announcement, the Fed stated that the application was “inconsistent with the required factors under the law.” It also claimed Custodia had an “insufficient” management framework and cited an earlier joint declaration by the Fed with the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency that found crypto assets to be at odds with sound banking practices. 

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

In spite of the rejection, the bank's application for a master account remains pending, the bank said in a tweet. A so-called “master account” that comes from Reserve membership enables a bank to make international transfers and carry out other important functions. Custodia, headed by Caitlin Long, applied for the master account in 2020 and sued the Fed over the long delay in considering the application in June.

This article is under development. 

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