Crypto Bank Custodia Sues Federal Reserve

The bank founded by Morgan Stanley veteran Caitlin Long filed suit against the U.S. central bank for delaying a decision on its application for a master account.

By James Rubin

Jun 7, 2022 at 11:09 p.m. UTC

Updated Jun 8, 2022 at 2:15 p.m. UTC

Custodia founder and CEO Caitlin Long (CoinDesk archives)

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James Rubin

James Rubin is CoinDesk's U.S. news editor based on the West Coast.

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Custodia filed suit against the U.S. Federal Reserve on Tuesday, saying the central bank was unlawfully delaying a decision on the crypto bank's application for a master account.

In the filing in the United States District Court of Wyoming, Custodia accused the Federal Reserve Board of Governors and Federal Reserve Bank of Kansas City of delaying the application process by 19 months and called the master account "critical" to Custodia's business.
"Such an account would allow Custodia to directly access the Federal Reserve, rather than going through an intermediary bank," Custodia said in the complaint. It also accuses the Fed of adopting "standardless" procedures that allowed it "to act in complete secrecy, whenever and however they choose."
The suit said the Fed's own paperwork says that "a master account decision "ordinarily takes [five to seven] business days," and that the processing delay had "clearly violated the [one]-year statutory deadline for doing so."
In February, Wyoming-based Custodia, which was formerly called Avanti Bank, seemed to be moving closer to acquiring the master account when it received a routing number issued by the American Bankers Association (ABA) – a key milestone in the process to receive a Fed account.
Routing numbers are used to identify banks for checks and other transactional purposes, and are issued only to federal- or state-chartered financial institutions that are also eligible to have a Fed account, according to the ABA’s website.

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James Rubin

James Rubin is CoinDesk's U.S. news editor based on the West Coast.

Follow @@JPRubin23 on Twitter

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James Rubin

James Rubin is CoinDesk's U.S. news editor based on the West Coast.

Follow @@JPRubin23 on Twitter