Crypto bank Custodia sues the Fed over 19 month delay on account approval

cointelegraph.com:

Wyoming based digital asset bank Custodia is suing the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City, claiming an “unlawful delay” in processing an application for its master account.

Custodia, formerly known as Avanti was one of the first Special Purpose Depository Institutions (SPDIs) also known as “blockchain banks” made under a Wyoming regulatory framework.

The bank was founded by Caitlin Long, an early advocate of Bitcoin (BTC) who established the institution in 2020 to provide accounts for crypto companies and serve as a bridge for them to the U.S. dollar payment system.

Custodia submitted an application for a Federal Reserve master account 19 months ago in October 2020. The account would allow Custodia to access the Federal Reserves payment systems without using a third party bank.

Nathan Miller a spokesperson for Custodia Bank told Cointelegraph:

The suit claims the Federal Reserve violated a United Stated Code which outlines a one-year deadline for processing the application and says that it even states on the master account application that a decision takes five to seven business days.

The Fed’s Kansas City bank was ready to approve the account before the Federal Reserve Board asserted control over the process in spring 2021 which “derailed” the application, Custodia says.

Custodia states that the “black-box bureaucratic process” meant it had exhausted “all options short of litigation” and it sought to compel the Federal Reserve and its Kansas City bank to approve its master account within 30 days.

Custodia plans to provide final settlement for U.S. dollar payments in digital asset transactions, along with providing digital asset custodial services. A key part of its service is to clear