Senator Lummis Opposes Court Decision in Custodia v. Fed Case
Following the decision on the case between Custodia Bank and the Federal Reserve (Fed), US Senator Cynthia Lummis expressed her disagreement, emphasizing that the law passed by Congress must be followed for the issuance of principal accounts to Special Purpose Depository Institutions (SPDIs) in Wyoming. .
The decision in favor of the Fed has fueled debate about its impact on financial freedom and innovation in the United States, particularly in the burgeoning cryptocurrency sector.
Background of the Custodia and Fed Case
Custodia Bank, a Wyoming approved depository institution, filed suit against the Federal Reserve after a lengthy delay in considering the principal account application. These accounts are critical for banks as they provide instant access to the bank’s services. Federal ReserveIncludes check clearing, wire transfers, and automatic clearing house (ACH) payments.
Custodia argued that its case did not meet such a requirement, which is mandatory for all federally or state-chartered depository institutions under federal regulations.
The lawsuit was filed due to the Fed’s delay of more than 20 months before any decision was reached, well beyond the usual 5-7 business days required for master account approvals. Eight months after the lawsuit, Custodia’s legal battle has only gotten worse. fed It officially rejected the application, which represents regulatory challenges faced by many crypto-related businesses.
Differences in the Fed’s Assessment
Examinations during the lawsuits revealed major changes in valuation reports prepared by the Kansas City Fed, which the parent Fed in D.C. later modified.
Preliminary findings revealed that Custodia met all key regulatory criteria such as capital adequacy, risk management and liquidity. However, the latter were edited to highlight the alleged drawbacks, thereby dispelling doubts about the objectivity and fairness of the review.
These changes spanned the areas of capital requirements and risk management to liquidity and management experience. custody There is a very negative picture in the final report. Critics argue that the changes point to greater distrust and regulatory conservatism towards digital asset service providers, which could hinder the region’s growth and innovation.
Custody Support and Broader Implications
The case received significant publicity and support from various parties, including the Blockchain Association and the Wyoming Attorney General, who filed amicus briefs in support of Custodia. This relief highlights the perceived broader implications of the case, going beyond Custodia’s specific interests to include key issues such as regulatory clarity, financial innovation and the incorporation of digital assets into the mainstream financial system.
Senator Lummis’ stance also reflects growing concern among some policymakers about what they see as an overly cautious or obstructionist regulatory approach to the crypto industry, often colloquially referred to as “Operation Chokepoint 2.0.” The term alludes to a perceived systematic effort to limit the operational scope of cryptocurrency businesses with strict regulatory measures.
Also Read: Judge Sides with Federal Reserve in Custodia Bank Crypto Case
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Kelvin is a distinguished author specializing in crypto and finance, with a bachelor’s degree in Actuarial Science. Known for her sharp analysis and insightful content, she is fluent in English and specializes in comprehensive research and on-time delivery.
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