Custodia’s New Features
Renowned as a crypto-friendly bank, Custodia recently made headlines with its decision to commence accepting U.S. dollar deposits. Furthermore, residents of specific U.S. states can soon expect the bank to offer Bitcoin custody services. In addition, the bank has also begun extending U.S. government money market fund services to its clientele.
Gaining Regulatory Approval
Caitlin Long, the Chief Executive Officer of Custodia, shared insights with Decrypt about this monumental move. “Gaining permission from our bank regulator to manage customer deposits was no small feat,” she noted, highlighting the stringent criteria banks need to meet to initiate operations. According to Long, while the industry is rife with regulatory hurdles, the future of custody in this realm lies with regulated entities, predominantly banks. “The trajectory mirrors the securities industry, where banks, not trust entities or non-banking institutions, are the primary custodians,” Long remarked.
Service Availability
Custodia’s official communication channels, like their Twitter, have clarified that the bank’s current offerings are tailored for business customers. They’ve also indicated a phased expansion approach, emphasizing their commitment to a “gradual and meticulous” growth plan instead of the typical crypto industry’s rapid pace.
Customer Protection: The Upper Hand of Banks
Long believes that banks inherently have an edge when it comes to offering robust customer protections, compared to non-banking entities. This stance underscores Custodia’s strategy, emphasizing the importance of customer safety and assurance.
Journey to Expansion: Not Without Its Challenges
The announcement from Custodia was not just a mere update; it came with a sense of achievement. The bank has triumphantly navigated numerous hurdles, many of which aren’t standard prerequisites anymore. Yet, challenges persist. Custodia Bank is embroiled in a legal battle with the Federal Reserve over the latter’s consistent refusal to grant the bank access to FedWire, alleging potential threats to security and stability. Gaining this access would be a significant milestone, given FedWire’s impressive record of processing transactions worth over $1 quadrillion in the previous year.
Long has been vocal about her views on the Federal Reserve, especially regarding its new FedNow payment service. She believes the institution has been inflexible and accuses it of disregarding legal mandates.
What the Future Holds
With an optimistic outlook, Long divulges that Custodia’s primary focus now lies in gaining the final nod from regulators to roll out its Bitcoin custody service. “We’ve charted it out for the next 6 to 12 months,” she revealed, indicating a promising trajectory for the bank and its customers.
