Wyoming Crypto Bank Denied for Federal Reserve System Membership (apnews.com) 23
The Associated Press reports that America's Federal Reserve Board "has denied a Wyoming cryptocurrency bank's application for Federal Reserve System membership, officials announced Friday, dealing a setback to the crypto industry's attempts to build acceptance in mainstream U.S. banking."
Many in crypto have been looking to Cheyenne-based Custodia Bank's more than 2-year-old application as a bellwether for crypto banking. Approval would have meant access to Federal Reserve services including its electronic payments system.
The rejection adds to doubts about crypto banking's viability, particularly in Wyoming, a state that has sought to become a hub of crypto banking, exchanges and mining....
Custodia sued the Federal Reserve Board and Federal Reserve Bank of Kansas City in Wyoming federal court last year, accusing them of taking an unreasonably long time on its application. In a statement Friday, the company said it was "surprised and disappointed" by the rejection and pledged to continue to litigate the issue.
In a statement, America's Federal Reserve Board argued argued that Custodia's "novel business model" and focus on crypto-assets "presented significant safety and soundness risks." "The Board has previously made clear that such crypto activities are highly likely to be inconsistent with safe and sound banking practices.
"The Board also found that Custodia's risk management framework was insufficient to address concerns regarding the heightened risks associated with its proposed crypto activities, including its ability to mitigate money laundering and terrorism financing risks."
The rejection adds to doubts about crypto banking's viability, particularly in Wyoming, a state that has sought to become a hub of crypto banking, exchanges and mining....
Custodia sued the Federal Reserve Board and Federal Reserve Bank of Kansas City in Wyoming federal court last year, accusing them of taking an unreasonably long time on its application. In a statement Friday, the company said it was "surprised and disappointed" by the rejection and pledged to continue to litigate the issue.
In a statement, America's Federal Reserve Board argued argued that Custodia's "novel business model" and focus on crypto-assets "presented significant safety and soundness risks." "The Board has previously made clear that such crypto activities are highly likely to be inconsistent with safe and sound banking practices.
"The Board also found that Custodia's risk management framework was insufficient to address concerns regarding the heightened risks associated with its proposed crypto activities, including its ability to mitigate money laundering and terrorism financing risks."
Good grief (Score:5, Insightful)
How was that supposed to even work? Even before the crypto-crap-crash, the value of a cryptocurrency bank's assets could (and would) shift by an absurd amount.
The Fed is also all about control and regulation, which is the antithesis of what crypto investors want.
Re:Good grief (Score:4, Insightful)
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You think 99% of politicians give a shit where the money comes from?
How do you think that of the 535 members of Congress, only a handful aren't multi multi multi millionaires after coming into office with nothing?
Are they all just really good investors? Won the lottery a few times each?
No, every single one knowingly took dirty money and even sought it out through their campaign organizations.
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Crypto is a pyramid scam, and it always has been.
Ah, so that must be why one of the most powerful political parties on the planet accepted millions in donations from FTX
Naturally, because the donations were in the form of cold, hard cash, and not craptocoins.
Re: Good grief (Score:2)
Re:Good grift (Score:1)
Fixed the subject. Wyoming is a state full of morons.
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Lol, wut?
There are very few here who have hated crypto as much or as long as I have but wtf are you talking about GS destroying human civilization with bad crypto buying?
Dude. Wow. Wtf? Drama much?
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The board is probably still laughing (Score:3)
I mean, something as stupid and disconnected like this has no chance at all. Sure, they can hand in an application, bit that is how far they get and this was always clear. There really is no surprise here at all.
Re:The board is probably still laughing (Score:5, Informative)
Except the crypto bros are probably still trying to figure out how they can have a solid application they were still rejected.
It's really a form of cognitive dissonance in that crypto bros thing they have something so new and innovative that everyone should be jumping ship from traditional finance to the new age of web3 finance, yet everyone else sees the fact that the reason traditional finance is so heavily regulated (and some would still say not regulated enough) is because everything crypto is, has happened before - say, in the 19th and early 20th centuries.
But it's new and shiny - just like the feds were over a century ago.
History repeats itself constantly. Heck, even in this age of the FDA there's still snake old sales people (e.g., goop, among other "supplement" vendors - because the FDA allows "supplements" to make basically any claim they want).
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Yep, pretty much. The very reason why finance is tightly regulated is because it is _known_ to not work otherwise. The crypto-morons are just ignorant of history or arrogant enough to think it does not apply to them. What a collective fail.
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Well you see it's the new new new economy! Everything is different now! The laws of finance simply do not apply! Can only go up long term! HODL!!!1111 REEEE!!!1
I'm surprised these arrogant jerks even tried to submit an application to join their crap to the real world. And thankfully they got a punch in the nose rejection.
And just a quickie to the person 2 up from here: definitely agree with all you said, especially that we don't have enough regulation after a hundred+ years of adding new rules and regu
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A ton of Wall Street guys should be in jail not sipping wine and eating caviar for lunch at a Michelin rated restaurant.
Yes, most definitely.
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liquidity and holdback (Score:2)
I'd imagine the applicant couldn't adequately explain how they'd maintain the liquidity and regulatory standards that come with being an insured bank.
FDIC can and does force banks to sell assets and or sell themselves to another entity if they get to far outside of line with their guidelines. In which case, whom would a bank with primarily crypto exposure sell themselves to?
Oh right .. all the risk is on the part of the institution, not the applicant.
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Well you see in order to back their crypto bank they'd just issue a new crypto coin, BankCoin and use that to back their other coin.
This worked great for FTX, Sol and many others so why not them? It's a proven crypto business model: issue crap coins, convert customer money to USD, flee to non-extradition country, get plastic surgery.
Crypto trading (Score:1)
rypto (Score:1)