U.S. Federal Reserve rejects crypto-focused bank’s application to be supervised by central bank

Jan 27 (Reuters) – The U.S. Federal Reserve on Friday rejected crypto-focused Custodia Bank’s application to become a member of the Federal Reserve System, saying the bank’s proposed business model and focus on digital assets presented significant safety and soundness risks.Custodia, which is based in Wyoming and is chartered through the state as a special purpose depository institution, lacked a sufficient risk management framework to address the heightened risks associated with crypto, the Fed said, including crypto’s potential use in money laundering and terrorist financing activities.Custodia Bank Chief Executive Caitlin Long said in a statement that the bank …
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