U.S. Federal Reserve Board Denied Custodia Bank’s Application for Membership

The U.S. Federal Reserve Board has denied Custodia Bank’s application for membership, claiming it’s "novel business model and proposed focus on crypto-assets presented significant safety and soundness risks."

"Custodia’s risk management framework was insufficient to address concerns regarding the heightened risks associated with its proposed crypto activities, including its ability to mitigate money laundering and terrorism financing risks," the Fed added.

"Custodia is surprised and disappointed by the Board’s action today," Caitlin Long, Custodia’s CEO, said in a press statement. "The Fed advised Custodia 72 hours ago that it could either withdraw its membership application or see it denied, and the Fed denied it in record time."