The Custodia Bank Lawsuit: Deaton’s View on its Significance over Ripple & Coinbase

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A significant stride was taken by Custodia Bank in their ongoing legal tussle with the Federal Reserve when a Wyoming Federal Judge rejected the dismissal motions presented by the Fed and the Federal Reserve Bank of Kansas City. This marks another checkpoint in the crypto-friendly bank’s saga against the national financial institution.

Custodia Bank Fights Back

Founded by former Morgan Stanley executive and Bitcoin advocate Caitlin Long, Custodia Bank had aimed to offer account services to cryptocurrency businesses and create a critical conduit to the United States dollar. 

In June 2022, the bank sought legal redress against the Federal Reserve for what they termed as an “unlawful delay” in the consideration of their application for a master account. 

Dismissal Denied: A Win for Custodia Bank

The Federal Reserve’s latest attempt to thwart Custodia Bank’s legal action found no favor with the court. Custodia Bank’s spokesperson, Nathan Miller, shared the bank’s delight over the ruling, expressing satisfaction that the Fed’s self-given power to override state bank charter decisions would now face the scrutiny of a federal court.

In October 2020, Custodia Bank had submitted its application for a Federal Reserve master account. The approval of this application would have given the bank access to the Fedwire network, the Federal Reserve’s payment system, which last year processed well over 196 million transactions. However, the Fed rejected Custodia’s membership application in January 2023, citing inconsistencies with legal requirements and pointing to the bank’s crypto activities.

Deaton Weighs In: Custodia’s Case Takes Center Stage

Renowned crypto lawyer and Ripple supporter, John Deaton, took to Twitter to celebrate this ruling as a significant victory. According to Deaton, Custodia Bank’s success in the court was a beacon of hope for plausible claims in the world of cryptocurrency. He went on to argue that among the ongoing cases in the cryptocurrency space, including those involving Ripple, Coinbase, and Binance, the case of Custodia Bank stands as the most crucial.