Fed Denies Custodia But Opens Doors for Kraken
The U.S. Federal Reserve has definitively closed the longstanding legal battle with crypto bank Custodia, dismissing its lawsuit. This happened almost simultaneously as the regulator opened a master account for crypto exchange Kraken, one of the largest players in the cryptocurrency market.
Custodia, a Wyoming-based cryptocurrency company, had been fighting for access to the Fed's master account for several years. A master account allows banks to directly interact with the Federal Reserve System and use its services, such as executing payments. However, the court ruled that Custodia did not meet the regulator's requirements for such access.
At the same time, the Federal Reserve approved Kraken's request to open a master account. This became an important step in legitimizing the crypto industry in the U.S., as access to the Fed's infrastructure can significantly simplify operations between the traditional financial system and the cryptocurrency market.
Context and Expert Opinion
The Fed's decision in favor of Kraken, but against Custodia, demonstrates that the regulator is selectively granting access to its payment system to crypto companies. Likely, Kraken, as one of the largest and most well-known players, was able to convince the Fed that it can meet all necessary security and compliance requirements.
At the same time, the denial of Custodia may be related to the fact that this crypto bank, although based in the crypto-friendly state of Wyoming, still raises certain concerns for the conservative regulator. The Federal Reserve apparently concluded that the risks of granting access to Custodia outweighed the potential benefits.
Overall, the Fed's decision demonstrates the ambiguous attitude of the regulator towards the cryptocurrency industry. On the one hand, it is gradually opening doors for large players, on the other hand, it continues to maintain high barriers for many other crypto companies. This creates a certain uncertainty for the entire sector and requires the crypto industry to further work on building trust from traditional financial institutions.