Fox Business Journalist Eleanor Terrett believes Custodia Bank’s lawsuit with the United States Federal Reserve is the next big crypto case to focus on after the Satoshi Nakamoto identity case involving Craig Wright and COPA ended recently.
Custodia Bank Lawsuit to Set Major Precedence
On Thursday, Terrett acknowledged that if Custodia Bank secures victory in its lawsuit against the U.S. Federal Reserve, it will mark a pivotal point for the broad crypto industry. In addition, she stated that it would make Caitlin Long, the founder and CEO of Custodia Bank, the first woman to take on the central bank and win.
The Fox Business reporter’s hypotheses are valid considering that the Fed has not lost any major lawsuits in the last 40 years. However, this is equally because the agency hardly gets sued.
Custodia Bank’s lawsuit with the Fed has been ongoing for many years, with Long at loggerheads with the bank. Her vision to establish a blockchain-focused bank since 2016 pushed her into lobbying the Wyoming state government to craft a specific digital asset banking structure. However, she met with a roadblock when she applied for a master account for Custodia but was denied by the Federal Reserve Bank of Kansas.
🚨NEW: Now COPA v. Wright is over, the next important court decisions we’re awaiting are @custodiabank v. @federalreserve and @SECGov v. @coinbase.
If a judge rules in favor of Custodia, it will be a massive industry win for #crypto and @CaitlinLong_ will become known as the… https://t.co/6FI3vFETOY
— Eleanor Terrett (@EleanorTerrett) March 14, 2024
The master account was supposed to grant Custodia Bank authorization to perform inter-bank transfers and other key Fed payment services. Long argued that the Fed did not approve its request because of its crypto-first approach. Eleanor Terrett confirms that in the past, these Federal Reserve approved master accounts to non-banking firms including Fidelity Management Trust and Raymond James Trust.
Furthermore, she emphasized the failure of the Fed to issue the same account to crypto-friendly banks, which Custodia Bank argues makes the denial discriminatory.
Is This Lawsuit an Attack on Crypto Firms?
The lawsuit has been in court for a while and the scheduled trial date was recently canceled by a federal judge who said that a decision based on summary judgment is forthcoming. One of the legal arguments in the Custodia Bank lawsuit is whether the Kansas City Reserve Bank is a Federal agency and whether the Fed has the discretion to deny a master account to eligible institutions.
Winning this lawsuit against the Fed is likely to position all state-chartered banks and crypto-friendly banks on the same footing, per Terrett’s thoughts. Over time, many crypto firms have fought to have these policymakers make rules to accommodate cryptocurrencies. American cryptocurrency exchange Coinbase is still in court with the SEC over a similar matter.
A few days ago, Coinbase filed an opening brief in its legal brawl against the SEC, contesting the lack of clear regulatory guidelines in the cryptocurrency industry.
