US digital asset-focused bank Custodia has filed a lawsuit against the Federal Reserve Board and the Federal Reserve Bank of Kansas City for “unlawfully” delaying its application for a main account with the Fed. The bank received major support earlier this week after seven US congressmen submitted a friend-of-the-court brief. The lawmakers urged a Wyoming court to reject the FED’s motion to dismiss the lawsuit.
The brief was filed by three Republican senators, including Cynthia Lummis, Steve Daines and Kevin Cramer, and four GOP members of the House of Representatives, including Warren Davidson, Ted Budd, Trey Hollingsworth and William Timmons. A similar document has also been submitted by the state of Wyoming, Yahoo! Finance reported.
“For more than 19 months, the defendants have refused to act on Custodia’s application for a master account with the Federal Reserve,” the company said in its trial.
The bank says the defendant institutions breached the one-year statutory deadline for processing the application. They also violated the schedule on the main account’s paperwork, which states that such a decision should take five to seven business days. If Custodia secures a favorable decision, this could speed up similar registration procedures for other crypto businesses.
Lummis, who represents the state of Wyoming in the US Senate, has established himself as a crypto-friendly lawmaker, paving the way for legislation that could spur the industry’s growth. Last June, together with the Democratic senator who represented the state of New York, Kirsten Gillibrand, she introduced a draft bill, called the “Responsible Financial Innovation Act” that makes “a clear distinction between digital assets that are commodities or securities”.
The bipartisan bill aims to give “digital asset companies [with] the ability to determine what their regulatory obligations will be,” according to the bill’s summary.
Custodia was created in 2020 by Caitlin Long, a former executive at Morgan Stanley, and initially operated under the Avanti brand. The bank declares that its aim is to provide its business customers with a full range of banking and financial services with a focus on digital assets. Custodia is a Wyoming-chartered Special Purpose Depository Institution (SPDI).