Crypto Bank Custodia denies membership in the US Federal Reserve system-Finance
Crypto Bank Custodia denies membership in the US Federal Reserve system-Finance
The US Federal Reserve Board has rejected the attempt by Custodia Bank to become a member of the Federal Reserve System. According to the decision announced on Friday, the application submitted by Digital Asset Bank contradicts the legal requirements.
Federal Reserve Board says that the business model proposed by Custodia Bank carries risks
The cryptobank custodia has been denied membership in the Federal Reserve system of the United States. In an announcement of January 27, the Federal Reserve Board stated that the application, as submitted by the company, was "not compatible with the legally prescribed factors".
In the press release, it was further stated that Custodia is a special deposit that does not have the federal deposit and would like to participate in "uncontested crypto activities", including the output of a crypto asset. In this context, the board argued:
The new business model of the company and the proposed focus on crypto-assets mounting considerable safety and solidity risks.
The Federal Reserve Board recalled that it had previously found that "such crypto activities are most likely not compatible with safe and solid bank practices". It also said that the bank's risk management frame "including its ability to reduce money laundering and terrorist financing risks" are not enough to clear out relevant concerns.
"In view of these and other concerns, the company's submitted application was not compatible with the factors of which the board is legally obliged to assess", concluded the committee in the declaration and added that the order was released after an examination for confidential information.
Membership in the Federal Reserve System, Custodia, a bank, who is chartered by the state of Wyoming, would have brought certain advantages, for example with regard to taxes and investments. In a tweeted statement ceo caitlin said that the company was "surprised and disappointed" about the step of the board and emphasized:
Custodia offered a safe, state-regulated, solvent alternative to the ruthless speculators and fraudsters of crypto that enter the US banking system, with catastrophic consequences for some banks.
Long emphasized that Custodia was actively trying to regulate "that goes beyond all requirements that apply to traditional banks". She also noted that the rejection of the company's concerns about the processing of its applications by the FED and promised that the bank would continue to process the matter.
The executive referred to a lawsuit submitted by Custodia against the late decision of the central bank system for its application for a master account. The latter is still pending, as the company emphasized on Twitter. The banks keep the majority of their reserves on master accounts at the FED, which enables them to make transfers among themselves and to handle payments.
Also on Friday, the Federal Reserve Board published a fundamental declaration that both insured and non -insured bank institutions will be insured borders subject to certain activities, including such in connection with crypto assets.
Do you believe that the US Federal Reserve Board will change its attitude towards applications such as that of Custodia Bank in the future? Share your expectations in the comment area below.
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