Crypto bank Custodia has been denied membership in the United States Federal Reserve System. In an announcement dated Jan. 27, the Federal Reserve Board explained that the application, as submitted by the company, is “inconsistent with the required factors under the law.”
The press release further detailed that Custodia is a special purpose depository institution which does not have federal deposit insurance and wants to engage in “untested crypto activities,” including issuing a crypto asset. In that context, the Board argued:
The firm’s novel business model and proposed focus on crypto-assets presented significant safety and soundness risks.
(By Lubomir Tassev)
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