Custodia Bank's Crypto Ties Result in Fed Denial of Membership

The US Federal Reserve has denied Custodia Bank's application for membership due to its involvement in the crypto industry, citing concerns about the heightened illicit finance and safety and soundness risks associated with the sector. The Fed also noted that Custodia had not developed a sufficient risk-management framework for its proposed cryptoasset-related activities. Custodia Bank's spokesperson criticized the decision, calling it a demonstration of the Fed's shortsightedness and inability to adapt to changing markets.