This is rather big news for the cryptocurrency world.
Custodia Bank received its bank regulator's approval to start accepting deposits. This is a major step forward for the crypto bank.
It is expected to start being a custodian for Bitcoin.
We are watching the bridge between digital assets and traditional banking services. The bank is also moving into offering government money market fund services.
This is a major win for CEO Caitlin Long.
The Rise of TradFi
Cryptocurrency is currently being overrun by traditional financial institutions. TradFi is seeking to put its fingers all over this growing industry.
Custodia Bank is a bit difference since it was started with the intention of focusing upon digital assets. It was incorporated in Wyoming, one of the more friendly states for blockchain and cryptocurrency regulation.
Anyone who watches the industry with any regularity knows that cryptocurrency is under attack by the establishment. Companies such as Visa and PayPal recently announced their further push.
Long was in need of a win.
Excluded From FedNow
Custodia is presently excluded from FedNow. In fact, the bank has not been able to attain a master account with the Federal Reserve. This is a hindrance to the operations of the bank.
The FedWire system process $1 quadrillion in payments last year. Yes, you read that correctly: $1 quadrillion.
Obviously, Long wants her bank to be a part of this. The Fed is excluding many American banks from its latest system, FedNow.
Custodia has a lawsuit against the Fed due to the fact the central bank allowed a foreign back access to the system while US domestic banks are banned.
The Fed, for its part, cites security and risk concerns. Naturally, proponents of Cusotida Bank, including Long, feel otherwise.
Unique Bank
Custodia operates as the first special purpose depository institution (SPDI). This is a legal framework that allows it to offer financial services for U.S. dollars and digital assets. Demand deposits are protected under a 100% reserve requirement.
Technology is a driving factor for this institutions.
According to the website:
The custody of Bitcoin is on the 6-12 month road map according to what the bank stated.
More Pillars
There are many who still claim that cryptocurrency is going to be banned by governments. It is obvious the U.S. Government under Biden (and Trump for that matter) are not friendly to the industry.
Gary Gensler with the Securities and Exchange Commission has basically had free reign to run amok over the industry. It is likely that his goal is to get the industry in the control of Wall Street.
In spite of this, we are seeing some pillars put in place. Custodia being able to accept deposits is one move forward. If it gets custody approval, it will provide a bridge from fiat to digital. This is will be another option for people going forward.
Each time another is added, the likelihood of governments being able to stop it diminish a bit. This is a long term fight and the key, as always, is to keep building.
