Custodia, a digital asset bank, wants to operate as an uninsured bank, issuing a stablecoin backed by cash and other assets. But the Fed determined that the bank was not entitled to a master account in the Federal Reserve System and rejected its application to join the Federal Reserve System, indicating that the Fed wants to isolate payment tracks from crypto assets. It is reported that the Federal Reserve account allows holders to transfer reserves directly to another financial institution without another intermediary. Now, Custodia is fighting back. The company plans to file a notice of appearance on Monday, saying that it has hired two well-known people to represent it in its appeal, Ian Gershengorn and Michelle Kallen of the Jenner & Block law firm. Gershengorn served as acting deputy attorney general during President Obama's term, and Kallen is a representative of the special committee investigating the January 6 riots at the U.S. Capitol.
"This team has a deep understanding of federalism issues, extensive experience in federal regulation of the digital asset industry, and they also have an excellent record of appeals in government controversial cases," said Caitlin Long, CEO of Custodia, in a statement.
Custodia has received more support from Republicans so far. Wyoming Republican Senator Cynthia Lummis was particularly critical of the Fed's master account policy, which affects two companies in her state, Custodia and Kraken. (Morning Money)