Custodia Bank, a crypto-friendly Wyoming bank, said it plans to scale back its services as it prepares for policy reforms in the space.
Custodia Bank, a bank founded by Bitcoin advocate Caitlin Long, is scaling back its operations as it awaits anticipated policy changes that could create a more crypto-friendly regulatory environment, American Banker has learned.
According to a Nov. 21 report, the Cheyenne-based bank decided to reduce its activities to preserve capital “in anticipation of major crypto policy reforms,” a decision made earlier this week by the bank’s board of directors. Additionally, the bank aims to protect its patents on bank-issued stablecoins and its “clean compliance and operating record,” the report reads, citing Custodia’s statement.
The decision follows workforce reductions earlier this year, with the bank cutting nine of its 36 employees to conserve resources. Custodia remains embroiled in a legal battle with the Federal Reserve over access to a master account, which would grant it direct access to Fed payment services. In March, a court ruled against Custodia’s request for such an account and dismissed a related petition for review.
Fed rejection adds fuel to Custodia’s legal struggle
Custodia CEO Caitlin Long expressed gratitude to “shareholders who have helped us continue the fight for durability of banking access for the law-abiding U.S. crypto industry.”
In October 2020, Custodia Bank applied to the Kansas City Federal Reserve for a master account, a move that would allow it to offer the same services as institutions with direct access to the Fed’s payment systems. Three years later, however, the Federal Reserve rejected the application, citing the bank’s crypto-friendly stance and its status as a state-chartered institution rather than a nationally chartered one, as factors complicating its eligibility.
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