Custodia Bank’s Board of Directors have reportedly voted this past week to further reduce operations and “preserve” capital in anticipation of “major” crypto policy reforms from the incoming administration in Washington, D.C.
Custodia Bank noted that by taking this step ahead of the projected turn in U.S. crypto policy, Custodia still “preserves” its bank charter, its API-based real-time payments as well as Bitcoin custody platforms, its patent on bank-issued stablecoins and its “clean compliance” and operating record.
Caitlin Long, founder and CEO of Custodia Bank said that she is quite pleased with the Custodia team, the services they’re building for their customers, and their resilience in the “face of repeated debankings due to no fault of our own.”
Long added that she especially thanks Custodia’s customers and shareholders who have helped them “continue the fight for durability of banking access for the law-abiding U.S. crypto industry.”
As noted in the update, oral argument in Custodia’s lawsuit against the Federal Reserve is reportedly “scheduled for January 21, 2025.”
As covered, Custodia Bank, Inc. is a Wyoming bank formed to serve as a compliant bridge to “the U.S. dollar payments system and a custodian of digital assets that can meet the strictest level of institutional custody standards.”
Custodia clarified in the announcement that it is required to “fully comply with all applicable laws and regulations, including the Bank Secrecy Act and federal ‘know your customer,’ anti-money laundering and related laws and regulations.”
Custodia further noted that it will also comply with Wyoming’s special purpose depository institution and digital asset laws, which include requirements “that fiat deposits be 100% reserved and that Custodia meet the strictest investor protections in the digital asset industry.”
As reported in August of 2024, the Biden administration’s regulatory approach towards crypto-assets has led to considerable restructuring at a relatively small, yet somewhat prominent digital assets bank.
FOX Business revealed that Custodia Bank, a Wyoming based financial institution that provides various banking services to crypto firms, said that it plans to lay off 9 of its 36 staff members (in August of this year) in order to conserve resources as it deals with the country’s central bank via court proceedings.
The announced layoffs have been revealed as Custodia is involved in a court case with the Federal Reserve in an effort to gain access to a master account which provides state-chartered financial institutions access to the Fed’s liquidity facilities.
This reportedly includes payment services. If a service provider cannot use a master account, then they have to do work via other institutions that do have master accounts, which usually comes with considerable costs.