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A US appeals court has ruled against Custodia Bank, the crypto-friendly institution founded by Caitlin Long, upholding the Federal Reserve in a lower court decision.
In a ruling Friday in the United States Court of Appeals for the Tenth Circuit, three circuit judges affirmed a lower court judgment in the District of Wyoming. The appeal, presented in April 2024 after the court decided against granting Custody a master account of the US Federal Reserve, was the latest encounter since the crypto-friendly bank first submitted its application in October 2020.
“This case is seen in 21st century terms: cryptocurrency, digital assets, instant wire transfers, and master accounts,” said Friday’s ruling. “But there is nothing new about this problem. The courts have investigated the legality of our nation’s central bank and interpreted the relevant statutes since the foundation.”
Being approved for a Fed master account would have granted Custodia access to the payment network used by the US government and authorized financial institutions.
After Custodia initially requested access through the Federal Reserve Bank of Kansas City, the Fed rejected the bank’s application in 2023 for risks that were likely “inconsistent with safe and sound banking practices” due to its focus on digital assets. Custodia filed a lawsuit in 2022 before the rejection, alleging an “unlawful delay” by the Fed in processing its request.
Related: Custody, Vantage Bank’s launch platform for tokenized deposits
What are the next steps for Custody?
In a statement published at X after the judgment was published in the public docket, Custodia said it was “actively considering” asking the appeals court for a review:
“While we were hoping for a victory in the Tenth Circuit today, we received the next big thing – a strong dissent. It raised serious Constitutional questions about the Federal Reserve and was written by a judge who is by appointment on the panel of a similar case in the Ninth Circuit.”
Avanti was one of the first “blockchain banks” established in Wyoming by Long in a friendly regulatory environment at the state level. The company rebranded to Custodia in 2022. Cointelegraph reached out to Long for comment but had not received a response at the time of publication.
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