Caitlin Long and lawyer Michelle Kaplan explain why Custodia Bank felt compelled to sue the Fed.
Caitlin Long, founder and CEO of Custodia Bank, and Michelle Kallen, partner at Jenner & Block, join the podcast to discuss Custodia’s legal battle with the Federal Reserve—a fight that has drawn significant attention in the crypto industry.
Custodia, established as a special purpose depository institution in Wyoming, aimed to offer secure banking services for the crypto sector. Despite meeting state requirements and taking extra steps to demonstrate its commitment to safety, Custodia’s application for a Fed master account was met with delays and ultimately denied in an unprecedented 86-page report.
In this episode, Caitlin and Michelle explains why they believe the Fed’s rejection was politically motivated, how this relates to a operation Choke Point 2.0, the appalling small number of American banks owned by women, where they are in their lawsuit against the Fed, and what this case means for the future of crypto banking in the U.S.
Show highlights:
- What Custodia Bank is and how it got started in Wyoming
- How Custodia got into a fight with the Fed to get its master account
- How the dual banking system works in the U.S. and the differences between Custodia and traditional banks
- Why Custodia filed a lawsuit against its own regulator
- Why the Fed denied Custodia its applications and Caitlin’s response to the criticisms
- The political coordination meant to “intimidate” Custodia, according to Caitlin
- The amicus briefs that were filed in favor of Custodia
- Caitlin’s reaction to the Fed’s enforcement action against Customers Bank
- Why Caitlin says that it’s “abusive and corporatist” that the SEC is granting exceptions to big banks
- Why so few banks are owned by women and whether this played a role in Custodia’s denial
- The next steps in Custodia’s case and whether a stablecoin is viable for them
- Whether the elections are going to impact the case
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