A U.S. appeals court issued an unfavorable ruling against Custodia Bank, a bank known for its crypto-friendly approach, in favor of the Federal Reserve's position.
The U.S. Court of Appeals for the Tenth Circuit upheld the ruling of the U.S. District Court for the District of Wyoming on July 7. The case stemmed from an appeal filed by Custodia Bank after the Federal Reserve rejected its application for a primary account. The bank has been engaged in legal battles for years since first filing its application in October 2020.
The judgment states: "Although this case is filled with 21st-century jargon such as cryptocurrency, digital assets, instant transfers, and master accounts, the essence of the dispute is a historical issue—the legitimacy of the U.S. central bank was already under scrutiny in the early days of the nation's founding."
Custodia Bank provides robust financial services based on blockchain technology and is a Wyoming-chartered "special purpose depository institution." Founder Caitlin Long has consistently emphasized cooperation with regulatory agencies, portraying herself as a "bridge between the crypto world and traditional finance." However, the Federal Reserve has consistently refused to grant it a master account, citing "monetary policy risks and anti-money laundering concerns."
Market analysts believe this ruling demonstrates that crypto companies still face significant obstacles in integrating into the US financial system. The Custodia case, in particular, highlights that regulatory uncertainty remains a major barrier to the cryptocurrency industry's integration into the mainstream financial system, as evidenced by the bank's limited access to banking infrastructure.
