tl;dr
Wyoming-based Custodia Bank has accused the Federal Reserve Board of misrepresenting its crypto-friendly business model to block the bank's access to payment and settlement systems. Custodia argues that winning its appeals case would not create risks associated with banking crypto companies. The ban...
Wyoming-based Custodia Bank has accused the Federal Reserve Board of misrepresenting its crypto-friendly business model to block the bank's access to payment and settlement systems. Custodia argues that winning its appeals case would not create risks associated with banking crypto companies. The bank filed an appeal after being denied a master account at the Fed, claiming the rejection was politically motivated. The lawsuit, filed in 2022 and amended in 2021, is now with the U.S. Court of Appeals for the 10th Circuit.
Earlier this month, 11 Federal Reserve banks cautioned against setting a "dangerous" precedent if Custodia wins its appeal. They argued that it would effectively strip the regional banks of their ability to mitigate risks to the financial system and themselves.
Custodia emphasized state regulation and federal-state balance of power in its business model defense. The bank is regulated under Wyoming law and supervised by a local regulator. Custodia argued that the Fed's description of its business model ignores state banking laws and represents an anti-state bias.
While Custodia's lawsuit hinges on the U.S. Court of Appeals for the 10th Circuit's interpretation of banking laws including the Monetary Control Act, its brief underscores industry headwind comparisons to Operation Choke Point, an Obama-era initiative targeted at banks that did business with controversial industries.
In its September brief, the Fed banks argued that the ability to reject master accounts is a "fundamental and universal risk-management tool," not specific to the crypto industry. They stated that their ability to assess whether banks processed illicit transactions or have poor risk management controls would be hamstrung if Custodia won, citing other depository institutions denied master accounts.
With its arguments fully articulated in writing, Custodia's filing represents a milestone in its years-long quest for a master account. Both sides will have the chance to present oral arguments at court in the coming months before a decision in the appeals case is reached.
More about Masco Corporation
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Masco Corporation is a manufacturer of products for the home improvement and new home construction markets.
Sector: Manufacturing
Industry: Heating Equip, Except Elec & Warm Air; & Plumbing Fixtures
Market Cap: 17.83B
P/E Ratio: 19.97
EPS: 1.155
ROE: 4.09%
52-Week High: 35.49
52-Week Low: 0.116
Revenue: 7.878B
Operating Margin: 8.26%
Dividend: 0.009
Beta: -0.017
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