Custodia Bank Restructures Amid Legal Battle With Federal Reserve

According to PANews, the Biden administration's regulatory crackdown on cryptocurrencies has prompted a significant restructuring at a notable, albeit small, crypto bank. Custodia Bank, a Wyoming-based financial institution providing banking services to cryptocurrency companies, informed its employees on Thursday morning that it would lay off 9 of its 36 employees to conserve capital amid its legal battle with the U.S. Federal Reserve. The layoffs come as Custodia is embroiled in a legal dispute with the Federal Reserve over the so-called master account, which allows state-chartered institutions to use the Fed's liquidity facilities, including payment services. Without a master account, banks are forced to conduct business through other institutions that have one, often incurring high costs. Custodia executives attribute the layoffs to what they describe as the federal government's 'Operation Chokepoint 2.0,' a coordinated effort by the Biden administration to sever the cryptocurrency industry's ties with the broader banking system. Custodia founder and CEO Caitlin Long stated, 'Operation Choke Point 2.0 has dealt a devastating blow to the law-abiding U.S. cryptocurrency industry. Despite Custodia Bank's strong risk management and compliance record, we have been significantly impacted. Our size allows us to maintain operations while conserving capital until Operation Choke Point 2.0 ends or our Federal Reserve lawsuit concludes successfully.' Long did not elaborate on whether the layoffs would affect the company's profitability but reiterated that operations would continue as usual and that the recent developments would not impact Custodia's lawsuit.