Custodia recruits distinguished solicitors in Federal Reserve case

Custodia Bank has hired two solicitors to represent it in its case against the US Federal Reserve, Politico reported on May 26.

Custodia CEO Caitlin Long confirmed the news and said the two solicitors have a “deep understanding of federalism issues” and experience in federal regulation of the crypto industry. She also praised each solicitor’s “stellar appellate track record” in handling government controversy cases.

According to the report, Custodia has brought on Ian Gershengorn, formerly the Principal Deputy Solicitor General of the US under President Barack Obama, and former Solicitor General of Virginia Michelle Kallen, to represent the company during its appeal.

Both solicitors are members of the law firm Jenner & Block LLP.

Fox Business reporter Eleanor Terrett acknowledged the decision, noting that both have “strong win records” at the US Supreme Court and in the US Courts of Appeal.

Custodia is expected to file a notice of appearance before the end of the day.

Custodia’s appeal

In 2022, the company sued the Federal Reserve’s Board of Governors and Federal Reserve Bank of Kansas City (FRBKC) for allegedly refusing to grant it a Federal Reserve master account.

A Federal Reserve master account is a crucial tool for financial institutions, enabling them to conduct various transactions directly with the Federal Reserve without relying on intermediary banks. This direct access streamlines processes and facilitates smoother fiat-crypto transactions, a growing area of interest in the evolving financial landscape.

The court ruled in March that Custodia Bank has no statutory entitlement to such an account because the board of Governors had yet to file an agency decision on the matter. Custodia subsequently filed its latest notice of appeal on April 26.

According to Congressional Research Services, companies seek master accounts in order to access the central banking system without any need for intermediary banks because access to such accounts allows for easier fiat-crypto transactions.

The matter is separate from Custodia Bank’s attempts to become a member of the Federal Reserve. The board denied Custodia’s member application in January 2023.

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