Caitlin Long’s Custodia Bank Denied Federal Reserve Supervision
• Caitlin Long’s Custodia Bank, previously known as Avanti, has been denied supervision by the U.S. Federal Reserve on Feb. 23rd, 2021.
• The bank had submitted an application to become a member of the Federal Reserve System and was rejected due to lack of federal deposit insurance and risks associated with its cryptocurrency-focused activities.
• Kraken also has obtained a charter in Wyoming allowing it to operate similarly but have complained about federal regulation in recent weeks.
Caitlin Long’s Custodia Bank, formerly known as Avanti, has recently been denied supervision from the U.S. Federal Reserve on February 23rd, 2021 after submitting an application to become a member of the Federal Reserve System. The denial was based on factors such as lack of federal deposit insurance and risk associated with its cryptocurrency-focused activities. Another company that obtained a similar charter in Wyoming is Kraken which has also complained about federal regulations in recent weeks.
Custodia Bank is notable for obtaining a charter in Wyoming that allows it to operate a special-purpose depository institution and call itself a crypto bank; another company which has obtained such a charter is Kraken, an American crypto exchange service provider founded in 2011 by Jesse Powell operating since 2013 out of San Francisco, California.. Custodia CEO and founder Caitlin Long is a former Wall Street executive who worked at Credit Suisse and Morgan Stanley before taking over at Custodia Bank while Kraken CEO Jesse Powell is well-known for his leadership role at the exchange service provider firm he founded over 8 years ago..
Rejection From The Fed
The government agency responsible for this decision cited their original rejection from January 27th due to lacking federal deposit insurance along with highlighting the risks associated with its cryptocurrency-focused activities when justifying their decision not to grant supervision over Custodia Bank; ultimately deeming the application “inconsistent with the required factors under law” . After this initial rejection, Custodie requested reconsideration from the Fed which was once again denied on February 23rd without further explanation or reasoning given regarding this decision..
Kraken & Regulation Complaints
Kraken also received such an approval granting them access to operate similarly but have both companies have complained about federal regulation in recent weeks saying that regulators ignored their warnings about scams & frauds related to cryptocurrencies & blockchain technology although these complaints are yet to be addressed or acknowledged by any authority..