Custodia Bank, a financial institution in Wyoming known for its support of cryptocurrencies, has announced that it will be reducing its services in response to expected changes in regulations. The bank, which was founded by Bitcoin advocate Caitlin Long, is preparing for a shift in policies that could potentially create a more favorable environment for crypto businesses.
The decision to scale back operations was made by the bank’s board of directors in order to conserve capital ahead of anticipated policy reforms. Custodia Bank is also looking to safeguard its patents on bank-issued stablecoins and maintain its track record of compliance and operational excellence.
Earlier this year, Custodia Bank had to let go of nine out of its 36 employees as part of efforts to save resources. The bank is currently engaged in a legal dispute with the Federal Reserve regarding access to a master account, which would give it direct access to Fed payment services. Despite its efforts, Custodia’s request for such an account was denied by the court earlier this year.
CEO Caitlin Long expressed appreciation for the support of shareholders who have stood by the bank in its battle for continued access to banking services for the U.S. crypto industry. In 2020, Custodia Bank applied for a master account with the Kansas City Federal Reserve, a move that would have allowed it to provide services similar to those offered by institutions with direct access to the Fed’s payment systems. However, the application was rejected by the Federal Reserve three years later due to the bank’s pro-crypto stance and its status as a state-chartered institution.
This development has added to Custodia’s legal challenges, but the bank remains committed to advocating for the interests of the crypto industry in the United States. As the regulatory landscape continues to evolve, Custodia Bank is taking proactive steps to navigate the changing environment and position itself for future growth and success.