In the petition filed before a court in Wyoming, Custodia Bank alleges that the Kansas City Fed expressed a lack of respect, having denied the lender’s approval for a master account, CoinDesk reported on October 13. According to Custodia Bank, it has waited about 19 months to receive feedback on the master accounts, but no response has been provided. Notably, master accounts would enable Custodia to deposit funds with the Fed and be connected directly to the global financial system.
Role of master accounts
In this line, in the absence of a master account, Custodia is forced to use an intermediary bank to conduct operations. Therefore, Custodia is compelled to align with the intermediary bank’s rules and fees. A Custodia Bank representative told Finbold that the petition is ‘a supplementary filing in its existing lawsuit that began in June’. In the suit, Custodia alleged that the Fed was unlawfully delaying its application. The Fed has, however, argued that granting master accounts to facilities like Custodia Bank poses risks to the global financial system. In this case, the Fed has called for more evaluation time. As reported by Finbold, BNY Mellon received regulatory approval to offer cryptocurrencies to its select customers interested in Bitcoin (BTC) and Ethereum (ETH).
