Fed Excludes Crypto Banks While Rules Lag Behind, Custodia Says

The Federal Reserve and one of its regional banks are attempting to seal off the banking system from cryptocurrencies in the absence of a federal framework to regulate digital assets, counsel for a crypto-focused bank told a federal appeals court.

The Federal Reserve Bank of Kansas City justified rejecting Custodia Bank’s application for a Fed master account by outlining its concerns about the bank’s risk profile and novel bank charters more broadly.

But the real reason for denying Custodia access to the Fed’s payment system is a “frustration” at the lack of a federal regulatory regime for crypto, Ian Gershengorn, ...