Crypto bank Custodia filed suit against the U.S. Federal Reserve on Tuesday, saying the central bank was unlawfully delaying a decision on its application for a master account.
In the filing to the United States District Court of Wyoming, Custodia accused the Federal Reserve Board of Governors and Federal Reserve Bank of Kansas City of delaying the application process 19 months and called the master account “critical” to Custodia’s business.
“Such an account would allow Custodia to directly access the Federal Reserve, rather than going through an intermediary bank,” Custodia said in the complaint, which also accuses the Fed of adopting “standardless” procedures that allowed them “to act in complete secrecy, whenever and however they choose.”
The suit said that the Fed’s own paperwork says that “a master account decision “ordinarily takes 5-7 business days,” and that the processing delay had “clearly violated the 1-year statutory deadline for doing so.”
In February, Wyoming-based Custodia, which was formerly called Avanti Bank, seemed to be moving closer to acquiring the master account when it received a routing number issued by the American Bankers Association (ABA) – a key milestone in the process to receive a Fed account.
Routing numbers are used to identify banks for checks and other transactional purposes and are issued only to federal or state-chartered financial institutions that are also eligible to have a Fed account, according to the ABA’s website.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.