A Wyoming court has ruled against Caitlin Long's Custodia Bank, determining that the lender is not entitled to a Federal Reserve master account.
In a summary judgment on March 29Judge Scott W. Skavdahl held that Custodia Bank has no legal right to a master account and will not receive mandamus for such an account.
Custodia had argued that the Federal Reserve Bank of Kansas City (FRBKC) had to provide a master account simply because it was eligible to apply for one. At the same time, the regulator argued that it had the power to reject applications at its discretion.
The judge concluded that the plain language of the specific statute cited by Custodia supports the FRBKC's position. He noted that the law does not mention master accounts or require the Fed to provide them to every eligible depository institution.
Instead, the relevant section of the law seeks to ensure that certain services are available to member and non-member depository institutions – but not to all depository institutions. The same article also establishes an equal fee schedule for both forms of institutions.
The guard cannot contest
The judge also noted that the Board of Governors has not yet filed a final agency decision on the matter. Custodia Bank argued that a particular email – in which the Board of Governors said it had “no problem” with FRBKC's denial of the account – was considered a final decision by the agency.
The Board of Governors successfully countered that the message was designated only as a final agency decision to comply with Wyoming law and did not meet the legal test for a final agency decision.
According to the judgment, the court does not have jurisdiction to address Custodia's claims since the bank could not prove that the action was a final decision of the agency.
The guard responds
According to a statement obtained by FOX Business reporter Eleanor Terret, spokesperson for Custodia Bank said the company will determine its next steps after reviewing the judgment.
The spokesperson added:
“Challenging the Fed's heavy-handed tactics has always been an uphill battle, but Custodia Bank remains committed to our vision …. »
Custodia Bank describes itself as a digital payment and custody solution for business customers.
Although Custodia's crypto activities are not linked to the current case regarding master accounts, the Fed identified its cryptography is a concern in a related application through which it aimed to become a member of the Federal Reserve System.
The Board of Governors and the Federal Reserve Bank of Kansas City rejected Custodia's application for membership and principal account on January 27, 2023.