The chartered digital asset bank in Wyoming is suing the Fed for “violating timelines” for responding to a master account request.
- Before Avanti, the crypto bank sued the FED for delaying its application.
- Custodia is looking for a master account to grow its offer as a bank.
- You have +1 year waiting for a response, when it is normally ruled in a week.
The cryptocurrency bank founded by the veteran of wall street Caitlyn Long, Custodyis taking legal action against the United States Federal Reserve (FED), alleging that the central bank has illegally delayed a master account application.
According to several news outlets, the crypto bank filed a lawsuit v. FED Kansas City Branch and FED Board of Governors in the District Court of Wyoming. On the demand, Custody alleges that the headquarters of the central bank “violated the legal term of 1 year” to issue a response on a request that is “criticism” for your business.
formerly called Avanti Bank, Long’s crypto bank introduced the application for a master account in 2020. But since then, he has waited more than 18 months without getting a response; even when the branch of the FED said the request for Custody was complete and did not containno obstacle“according to the complaint.
FED violated regular times
A master account of the Fed, as pointed out The Block, allows institutions to directly access the US central bank’s payment systems. It also allows the most direct access to the country’s money supply. Banks without this license are often forced to rely on third parties that do have a master account to provide services.
Custodywhich is licensed in Wyoming, noted in the lawsuit that it was seeking a master account for “significantly reduce your costs” Y “provide new products and options to users of financial services“, as collected The Block, which cited the document. “Such an account would allow Custodia to access the Federal Reserve directly, instead of going through an intermediary bank.“.
The suit says the longer than a year is unusual, as the Fed’s own paperwork says a master account decision typically takes 5-7 business days. After arguing that there had been a schedule breach, he added that the delay increased in 2021, when the Fed’s board of governors stepped in and sought control of the decision-making process.
The crypto bank also accused the Fed of adopting procedures “no standards“. Now you are looking for aquick hearing” and a court order to compel the authority to provide a response within 30 days of the order.
There is a bureaucratic black box process with no clear rules or standards for processing applications, no clear lines of accountability or responsibility between the Board and the Kansas City Fed, and no clear end in sight to the saga of applications for Custody.
Custody wait for an answer
as you remember CoinDeskin February of this year, Custody seemed to be getting closer to acquiring the long-awaited master account when he received a routing number issued by the American Bankers Association (ABA), a step that the medium describes as key in the process to receive such a license from the FED.
According to the publication, which cites the ABA website, routing numbers are used to identify banks for checking and other transactional purposes and are issued sOnly to federal or state financial institutions that are also eligible to have a FED account.
Given the delay, and after having exhausted all means to obtain a decision on your application, Custody has been forced to postpone its offer of its services as an individual bank. Instead, it said in the suit that it has partnered with a master account correspondent bank, which it says is more expensive and can lead to risk.
Article by Hannah Estefanía Pérez / DailyBitcoin
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