Donald Verrilli, former US Solicitor General, has filed an amicus brief with the U.S. Tenth Circuit Court of Appeals, alleging that federal regulators are working to “debank” the digital asset industry. Verrilli, representing the Blockchain Association, supports Custodia Bank’s appeal against the Federal Reserve’s denial of a master account.
Custodia Bank applied for a master account with the Fed in October 2020, which is essential for efficient banking operations. The Fed’s repeated delays led Custodia to sue in June 2022. In 2023, the Fed officially denied the application, citing the bank’s ties to the cryptocurrency sector. A judge upheld this decision in March 2024
Verrilli argues that Custodia’s denial is part of a broader, coordinated effort by federal regulators to debank the crypto industry. He describes these actions as “aggressive” and “coordinated.” Industry leaders share concerns about increasing regulatory pressures on digital asset businesses.
Custodia Bank’s legal battle with the Federal Reserve is significant for the crypto industry. A victory for Custodia could set a precedent for other crypto-focused banks. Conversely, a continued denial may reinforce existing regulatory challenges. This case underscores the tension between regulatory bodies and the rapidly evolving crypto market, highlighting the need for balanced regulations to foster innovation while ensuring financial stability.
Verrilli’s claim that regulators aim to “debank” the crypto industry adds to the ongoing debate about the future of digital assets in the US. The outcome of Custodia Bank’s case could have far-reaching implications for the crypto sector and its integration with traditional financial systems.
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