The American bank Custodia, which specializes in digital assets, has filed a lawsuit against the Federal Reserve Board (FED) and the Federal Reserve Bank of Kansas City for “illegally” delaying its application for a main account with the FED. The bank received strong support earlier this week. Lawmakers have urged a Wyoming court to reject the FED’s motion to dismiss the lawsuit.
A brief was filed by three Republican senators, including Cynthia Lummis, Steve Daines and Kevin Cramer, and four Republican members of the House of Representatives, including Warren Davidson, Ted Budd, Trey Hollingsworth and William Timmons. A similar document was also submitted by the state of Wyoming, reports Yahoo! Finance.
“For more than 19 months, defendants refused to comply with Custodia’s request to open a main account with the Federal Reserve,” the company said in its lawsuit.
The bank claims that the institutions being sued violated the one-year legal deadline to process its claim. They also violated the timeline in the main account documents that such a decision should take five to seven business days. If Custodia obtains a favorable judgment, it 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 cryptocurrency-friendly lawmaker, paving the way for legislation that could spur industry growth. Last June, together with Democratic Senator representing New York State, Kirsten Gillibrand, she introduced a bill, dubbed the “Responsible Financial Innovation Act”, which establishes “a clear distinction between digital assets that are commodities or titles”.
The bipartisan legislative proposal aims to provide “digital asset companies 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 Morgan Stanley executive, and initially operated under the Avanti brand. The bank says its goal 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 Licensed Special Purpose Depository Institution (SPDI).
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