The Federal Reserve System of the United States of America has rejected the request of the cryptocurrency bank Custodia Bank to reconsider its application for membership in the Federal Reserve System.
Fed he announced denying it on February 23, saying that the Federal Reserve Board had previously determined that Custodia’s application “did not comply with the required factors under the Act.”
@federalreserve announces that it has rejected the request of Custodia Bank, Inc. on reconsideration of the board’s decision from last month on its application for oversight of the Federal Reserve System: https://t.co/ZYNUEoLeN1
— Federal Reserve (@federalreserve) February 23, 2023
In January, the Fed denied Custodia’s request become a member. Board rules allow applicants to request reconsideration of a membership decision.
At the time of the initial rejection, the Fed argued that Custodia had an “inadequate” governance framework.
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He also cited a made a joint statement along with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), which argued that cryptocurrencies are “contrary to safe and sound banking practices.”
These guards he said it wishes to join the Federal Reserve System so that it can be regulated to the standards that apply to traditional banks, paving the way for other crypto-banks that wish to be held to the same elevated standards.