August 13, 2024

Caitlin Long on Why the Fed’s Rejections of Custodia Bank Seem Politically Motivated - Ep. 687

1 hour 11 minutes

Custodia, established as a special purpose depository institution in Wyoming, aimed to offer secure banking services for the crypto sector. Despite meeting state requirements and taking extra steps to demonstrate its commitment to safety, Custodia’s application for a Fed master account was met with delays and ultimately denied in an unprecedented 86-page report.

In this episode, Caitlin and Michelle explain why they believe the Fed’s rejection was politically motivated, how this relates to Operation Choke Point 2.0, the appallingly small number of American banks owned by women, where they are in their lawsuit against the Fed, and what this case means for the future of crypto banking in the U.S.

Show highlights:

00:00 Intro

01:52 What Custodia Bank is and how it got started in Wyoming

06:04 How Custodia got into a fight with the Fed to get its master account

09:58 How the dual banking system works in the U.S. and the differences between Custodia and traditional banks

18:15 Why Custodia filed a lawsuit against its own regulator

24:33 Why the Fed denied Custodia its applications and Caitlin’s response to the criticisms

29:57 The political coordination meant to “intimidate” Custodia, according to Caitlin

42:43 The amicus briefs that were filed in favor of Custodia

48:48 Caitlin’s reaction to the Fed’s enforcement action against Customers Bank

53:35 Why Caitlin says that it’s “abusive and corporatist” that the SEC is granting exceptions to big banks

56:03 Why so few banks are owned by women and whether this played a role in Custodia’s denial

59:25 The next steps in Custodia’s case and whether a stablecoin is viable for them

1:05:21 Whether the elections are going to impact the case

Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com

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Guests:

Caitlin Long, Founder & CEO of Custodia Bank

Previous appearances on Unchained:

Why Caitlin Long and Meltem Demirors Are Worried About Crypto’s Future in the US

Caitlin Long: Why Avanti Will Be a New Kind of Crypto Bank

Michelle Kallen, Partner at Jenner & Block

Links

Timeline

PerkinsCoie: Federal Reserve Issues Final Guidelines for Master Account Access

CoinDesk: Crypto Bank Custodia Sues Federal Reserve

Davis Polk: Crypto bank sues Federal Reserve over delay in master account application

Fed’s 86-page report of its denial of Custodia’s membership

Custodia’s response to the Fed report

Custodia’s amended filing

Judge Scott Skavdahl’s order to dismiss

Davis Polk: District courts refuse to order Federal Reserve to grant master accounts to Custodia

Appeal

Custodia’s appeal notice

Custodia’s appeal filing

Amicus briefs for the appeal

Bitcoin Magazine: The Federal Reserve, Custodia Bank, And The Battle For Sovereignty

Paul Clement on behalf of the Digital Chamber and Global Blockchain Business Council (GBBC)

Don Verrilli for Blockchain Association

State of Wyoming

Americans for Prosperity Foundation

Members of the United States Senate Banking Committee and House Financial Services Committee

Former Sen. Patrick Toomey

Customers Bank:

CoinGeek: ‘Crypto’-friendly Customers Bank hit with Fed Reserve enforcement action

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By Laura Shin

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