Share this article
Crypto Bank Custodia's Bid for Fed Supervision Rejected Again
The Fed rejected Custodia's first bid last month.
By Nikhilesh De
Updated Feb 24, 2023, 6:47 p.m. Published Feb 23, 2023, 10:59 p.m.
Make us preferred on Google
The Federal Reserve Board said Thursday it had again rejected crypto bank Custodia's bid for Fed supervision, after previously denying the application last month.
The Fed board voted against reconsidering Custodia's application, a press release said. According to a list of votes, the decision was unanimous, consistent with last month's initial denial of Custodia's application to become a member of the Federal Reserve system.
STORY CONTINUES BELOW
"The Board previously concluded that the firm’s application as submitted was inconsistent with the required factors under the law. The Board’s rules permit an applicant to request that the Board reconsider its application decision," Thursday's release said, though it did not share much information beyond that.
In its initial rejection, the Fed said Custodia's business model "presented significant safety and soundness risks," and claimed Custodia did not have a sufficient risk management framework in place.
Read more: Crypto's Banking Problem: Industry Needs Access but US Regulators Keep Digital Assets at Bay
For its part, Custodia has renewed its efforts to force the Fed to grant it access through the courts, filing an amended complaint against the Federal Reserve as part of its ongoing legal fight. Custodia is seeking to both become a member of the Federal Reserve System and undergo Fed supervision and gain access to a Master Account through the Kansas City Fed.
If Custodia – or another crypto bank – received master account access, it would allow these banks to tap the Fed payment system and negate the need for using other intermediary banks.
When Custodia initially filed suit last year it alleged the Fed had missed mandatory deadlines to make a decision on its application. In its amended complaint, it called for a court order directing the Fed to grant the application.
"Custodia’s master account was denied on January 27, 2023, and Custodia has no other method by which it can access Federal Reserve services," the filing noted.
Read more: US Banking Regulators Warn Banks About Crypto Liquidity Risks
More For You
KuCoin captured a record share of centralised exchange volume in 2025, with more than $1.25tn traded as its volumes grew faster than the wider crypto market.
What to know:
- KuCoin recorded over $1.25 trillion in total trading volume in 2025, equivalent to an average of roughly $114 billion per month, marking its strongest year on record.
- This performance translated into an all-time high share of centralised exchange volume, as KuCoin’s activity expanded faster than aggregate CEX volumes, which slowed during periods of lower market volatility.
- Spot and derivatives volumes were evenly split, each exceeding $500 billion for the year, signalling broad-based usage rather than reliance on a single product line.
- Altcoins accounted for the majority of trading activity, reinforcing KuCoin’s role as a primary liquidity venue beyond BTC and ETH at a time when majors saw more muted turnover.
- Even as overall crypto volumes softened mid-year, KuCoin maintained elevated baseline activity, indicating structurally higher user engagement rather than short-lived volume spikes.
More For You
Ukraine banned Polymarket and there’s no legal way for it to come back
Polymarket and similar platforms are considered unlicensed gambling operators, leading to blocked access.
What to know:
- Ukraine has no legal framework for Web3 prediction markets, and current legislation provides no recognition for such platforms.
- Polymarket and similar platforms are considered unlicensed gambling operators, leading to blocked access.
- Legal changes are unlikely in the near future, as Parliamentary revisions to gambling definitions are extremely improbable during wartime, leaving prediction markets in a legal deadlock.
Top Stories
