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Master account denied without explanation and lawsuit pending...

 
The Federal Reserve Board argued that Custodia Bank’s proposed business model was “inconsistent” with approval in an order explaining its denial of the Wyoming-based crypto bank’s application for membership in the Federal Reserve System.
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Friday’s 86-page release, however, is the first time the central bank has expanded on its reasoning for the denial. The Federal Reserve Board argued that Custodia had insufficient risk management and controls, “particularly with respect to overall risk management; compliance with the Bank Secrecy Act and U.S. sanctions … financial projections, and liquidity risk management practices.”

The board also argued that Custodia’s revenue model, which “relies almost solely upon the existence of an active and vibrant market for crypto assets” makes it vulnerable to market volatility, even though the board admitted that “Custodia appears to have sufficient capital and resources to sustain initial operations.”
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More (incl link to 86 page report):

 
Kraken wants in. ...

Cryptocurrency exchange Kraken has unveiled a qualified custody service for institutional clients in crypto-friendly Wyoming through the firm’s long-standing state-chartered banking license in the region.

Kraken Institutional, announced on Wednesday, operates under the special purpose depository institution (SPDI) charter snagged by the exchange back in 2020. All deposits will be held in segregated accounts remote from the exchange itself and on a full-reserve basis.
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"Kraken made history as the first cryptocurrency exchange to receive a banking charter in the US in 2020," a spokesman for the exchange said in an email. "It’s taken us the best part of three years since this important milestone to work through all the various legal and compliance checks required to launch a bank and bring Kraken Financial to market."
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