The Federal Reserve Board has yet again denied the application of a Wyoming-based cryptocurrency bank as it tried to push for its acceptance into the country's central bank system. Acceptance into the federal reserve system would mean that the crypto bank would have access to its electronic payment systems and other perks.
The Custodia bank is best known for its two-year application to the Federal Reserve, but it argued that the company was inconsistent with the requirements of the law.
Federal Reserve Board Denies Custodia Bank, Inc.'s Application
(Photo : Alex Wong/Getty Images)
WASHINGTON, DC - DECEMBER 14: Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on December 14, 2022 in Washington, DC. The Federal Reserve announced that it will raise interest rates by a 0.5 percentage point to 4.5.
According to a news release by the Federal Reserve Board, Custodia Bank, Inc.'s application for joining the Federal Reserve has been denied. As per the release it "has concluded that the firm's application as submitted is inconsistent with the required factors under the law."
Custodia is one of the many cryptocurrency-centered companies in Wyoming, particularly in Cheyenne, with a growing community of those engaged in the digital assets business.
The Federal Reserve Board has also deemed before that there are significant risks in crypto-related organizations, hence the reason for their denial of its application.
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Crypto Banks Have No Future in the Federal Reserve?
Custodia pushed for its application for two years now, and it recently got a "no" from the Board for its planned ventures on the crypto platform. It is unknown if the blockchain industry has no future in the Federal Reserve, but unless a company becomes compliant and consistent with the law's requirement, there would be no entities to be accepted by the Federal Reserve.
Cryptocurrency and the Market
The government is centering on regulating the cryptocurrency market in a new subcommittee, that would help the industry in helping control its availability, to help consumers and investors in their needs. The goal is to regulate the digital assets there is in the country, in order to avoid situations like bankruptcies, as what happened to FTX.
There were many developments in the cryptocurrency market due to the FTX implosion, and different companies have been struggling since the downward trend of digital assets. One renowned Bitcoin miner has also filed for bankruptcy, particularly under Chapter 11 amidst the crisis, with many companies also close to it.
Now, there is a chance for the crypto market to regain its losses and see better regulation, with some also applying for more access and stability, particularly in its Federal Reserve applications. However, to no hope, it got rejected its proposal, with the agency claiming that the Custodia Bank is inconsistent with the requirements of the law.
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