Custodia Bank, a Wyoming-based crypto-friendly bank, has argued that the Federal Reserve Board has made misrepresentations about its business model to prevent it from accessing payment and settlement systems. The bank filed an appeal after losing its case in April, arguing that it is entitled to a master account at the Fed, which would give it access to liquidity facilities and payment services. Custodia claims that the rejection of its application to become a member institution was a politically-determined outcome. The Federal Reserve banks have argued that if Custodia wins its appeal, it would set a dangerous precedent and strip the regional banks of their ability to mitigate risks to the financial system. Custodia's lawsuit highlights the industry's concerns about the politicization of banking and draws comparisons to Operation Choke Point, an Obama-era initiative targeting banks that did business with certain industries. The case is currently before the U.S. Court of Appeals.



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