Custodia Bank Launches Bitcoin Custody Service for Businesses
Custodia Bank, a crypto-friendly bank, announced that it has officially launched its Bitcoin custody platform to customers in select U.S. states.
On November 7, Custodia Bank, formerly known as Avanti Financial Group, announced on X (formerly Twitter) that they have now launched a dedicated platform to cater to Bitcoin custody services aimed at businesses such as fiduciaries, investment advisers, fund managers, and corporate treasurers.
1/ BIG NEWS!! Custodia’s #Bitcoin custody platform recently went live. Custodia is a *BANK* built by Bitcoiners & we offer segregated (not omnibus) custody accounts on our custom-built Bitcoin custody platform. Our whitepaper describes how we're different: https://t.co/O6lgaWdSxK
— Custodia Bank ™ (@custodiabank) November 7, 2023
Founded in 2020 by Caitlin Long, a former managing director at Morgan Stanley, Custodia Bank is based in Cheyenne, Wyoming, with a mission to facilitate digital assets’ integration with the U.S. dollar payments system and provide digital asset custodial services.
In August, the bank announced plans to accept dollar deposits with a focus on serving U.S. business customers. It also hinted at the forthcoming launch of its Bitcoin custody services. As of now, Custodia Bank has received regulatory clearance from the Wyoming Division of Banking to provide Bitcoin custody services. The platform offers segregated custody accounts through its custom-built Bitcoin custody platform, combining Bitcoin custody with U.S. dollar services in a single, user-friendly platform with the aim of simplifying operations and minimizing risks.
The bank’s special-purpose depository institution charter under Wyoming’s crypto-friendly laws passed in 2019 positions Custodia Bank as one of the pioneering institutions to receive this status. Operating as a non-lending institution, Custodia Bank’s primary focus is Bitcoin custody.
As a part of its commitment to user satisfaction and platform improvement, Custodia Bank expressed gratitude to those who provided valuable feedback during the development of its Bitcoin custody platform.
“Since we built our Bitcoin custody platform in-house, we’re especially grateful to those willing to help us by providing user feedback.”
Custodia Bank Launches Amid Regulatory Scrutiny and Legal Battle with Federal Reserve
The official launch of Custodia Bank in 2020 occurs at a time when the cryptocurrency industry is under increased scrutiny and regulatory pressure following high-profile scandals in the digital asset sector. The bank emphasizes its “regional bank-style” risk management program and its commitment to becoming a regulated bank despite the challenges.
Custodia is also pursuing a lawsuit against the Federal Reserve and the Federal Reserve Bank of Kansas City over the “unlawful delay” of its request to join the central bank’s payments system, which it considers vital for its effective operation.
The Federal Reserve had rejected Custodia’s application, citing significant safety and soundness concerns, and the Kansas City Fed followed suit by rejecting the bank’s request for a Fed master account.
In a comprehensive report issued in March 2023, the Federal Reserve’s board explained that its decision to reject Custodia’s application was driven by concerns regarding banks being heavily involved in crypto-related activities.
Despite Custodia Bank’s reported commencement of business operations in August 2023, the Federal Reserve has hindered many aspects of its proposed business model.