Many digital banks are currently dealing with a lot of painful regulatory measures and setbacks when applying for their operating permits. However, in this case, the Bitcoin Bank, Custodia, has resolved to deal with the issue in a court of law.
On May 7th 2022, the bitcoin bank founded by Caitlin Long filed a lawsuit against the Federal Reserve’s Board of Governors and the Federal Reserve Bank of Kansas City, accusing them of illegally delaying its application to open a Master Account that allows the bank to operate freely and legally in the country.
Caitlin Long is a 22-year Wall Street veteran and an expert in bitcoin and blockchain technology. Active in bitcoin since 2012, Long helped drive Wyoming’s trail-blazing 2018 blockchain legislation as a co-founder of the Wyoming Blockchain Coalition. She is also the founder of Avanti Financial Group – the second largest crypto bank legally operated in the United States, besides Kraken.
According to the lawsuit, Custodia strongly claims that the Fed is acting contrary to its own legal parameters since, according to their own words, the issuance of the document requested by the bank “ordinarily takes five to seven business days.” However, they have managed to find ways to delay its issuance.
Way Behind Schedule
The lawsuit focuses on a 19-month delay that Custodia has had to grapple with when applying for a document that any other bank could have obtained in less than a week.
That is why the bank says the Fed “clearly violated the ‘one-year’ statutory deadline for doing so.” They even indicated that they had received the routing number issued by the American Bankers Association (ABA), which is only given to financial institutions eligible to open a Master Account.
To make matters worse, the crypto bank made further claims that the Feds are delaying in a bid to favor ‘Legacy’ financial institutions, whose interests are greatly represented in the Board of Directors of the Kansas City’s Federal Reserve.
This Master Account is of vital importance to the bank, as it would allow direct access to the Fed without the need to go through intermediary banks, being able to streamline its operations by providing a secure bridge between digital assets and the U.S. dollar payment system.
Tether Launches On Tezos Blockchain
While crypto banks are busy suing the Feds, current stablecoin leader Tether has now launched on the Tezos blockchain.
Tether, the issuer of the world’s largest stablecoin, has announced the launch on the layer 1 network, Tezos which uses a variant of Proof-of-Stake (PoS) known as Liquid Proof-of-Stake (LPoS), designed to undergo changes without initiating a hard fork into two separate blockchains. Subsequent upgrades have decreased gas costs, as well as a lowered carbon footprint.
According to the press release shared with CryptoPotato, the introduction of USDT on Tezos is expected to simplify and enhance on and off-ramps into the Tezos’ DeFi ecosystem.
Commenting on the latest development, Paolo Ardoino, CTO at Tether, said,“We’re excited to launch USD₮ on Tezos, offering its growing and vibrant community access to the most liquid, stable, and trusted stablecoin in the digital token space. Tezos is coming fast onto the scene and we believe that this integration will be essential to its long-term growth.”
Alessandro De Carli, a founder at Papers, also weighed in on the matter, indicating that the introduction of USDT on Tezos will make its DeFi ecosystem more efficient and simple to use.