The Feds get sued by Crypto bank Custodia after the massive delay of 19 months in their account approval. The bank claims that the delay is unlawful and it’s too much time to process a master account application. The Federal Reserve Bank of Kansas City and the board of governors face the lawsuit. It is quite possible that the delay was only because it’s a crypto bank that doesn’t suit very well with the Feds.
Crypto bank Custodia sues the Feds
The crypto bank submitted its application for a master account in October 2020 to the Federal Reserve, which was almost 19 months back. Custodia planned to use the payments systems of the Feds without a third-party bank. However, as you might have guessed, this delay must have cost them a ton of extra fees and delays in operations. So, their lawsuit wants a fair dealing of their application by the Federal statute and US Constitution. Most importantly, they have followed every rule that is necessary for the approval of the master account.
The United States Code states that there is a 1-year deadline on the processing of any application that the Feds violated. In fact, they themselves give a 5-7 business day deadline on the processing of this application. Custodia also reported that the application was about to be approved by the Feds Kansas city bank, but the Federal Reserve board interrupted and derailed the process. Now, their demand is to get the account approval within 30 days.
It is a blockchain bank formed under Wyoming regulatory framework by Caitlin Long back in 2020. They plan to provide accounts to crypto companies and act as a bridge between the dollar payment system. Once their account gets approved, they will work with the Feds to clear payments directly for customers to reduce costs and any delays. It will also become the first digital asset bank to get a Federal Reserve master account. Till then, they have to make do with a 3rd party bank which is a lot more expensive for everyone.
What are your thoughts as the Feds get sued by Crypto bank Custodia? And do you think this kind of unfair treatment of the Federal Reserve will end somewhere? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.