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The bitcoin price has settled at around $23,000 per bitcoin after A $200 Billion Crypto Market Earthquake.
Now, the US Federal Reserve has dealt a crushing blow to the crypto industry's hopes of gaining mainstream acceptance by rejecting crypto bank Custodia's application to become a member of the Fed system, warning that it suffers "significant risks of security and solidity".
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The Federal Reserve, under Chairman Jerome Powell, has found Custodia Bank's bitcoin and crypto focus ... [+]
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Wyoming-based Custodia's "novel business model and proposed focus on crypto assets presented significant safety and soundness risks," the Federal Reserve board said in a statement. a declaration.
"The board has previously made clear that such cryptographic activities are highly likely to be inconsistent with safe and sound banking practices," the Fed said, adding that Custody's "risk management framework was insufficient to address concerns about the elevated risks associated with their proposed cryptographic activities." , including its ability to mitigate money laundering and terrorist financing risks."
Custodia, known as Avanti before February last year, applied to become a member of the Fed system two years ago.
"Custodia is surprised and disappointed by today's action by the board," Custodia CEO Caitlin Long said in a statement. a declaration. "The Fed advised Custodia 72 hours ago that he could withdraw his membership application or see it denied, and the Fed denied it in record time."
Last year, Custody defendant the Federal Reserve board of governors and the Federal Reserve Bank of Kansas City, accusing them of "illegally" delaying a decision on their application for a Fed master account.
Fed Chairman Jerome Powell has previously He warned against granting master accounts to crypto banks that could trigger a flood of applications, saying the Fed has to consider “the broader safety and soundness implications” and calling an approval “simply a great precedent.”
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The bitcoin price has tumbled after its big pandemic-era rally, but some think bitcoin ... [+]
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The Fed's slap in the face of the crypto bank comes after the crypto banking industry suffered extreme volatility and withdrawals following the FTX crash.
California-based Silvergate, described by FTX founder Sam Bankman-Fried as a banking revolution for blockchain companies, has seen its share price fall nearly 90% in the past six months and posted outflows of bitcoin and crypto of more than $8 billion during the fourth quarter of 2022.
