Wyoming Attorney General Bridget Hill has filed a motion to intervene in the lawsuit between Custodia Bank and the Federal Reserve System, in order to defend Wyoming’s regulation of Special Purpose Depository Institutions (SPDIs). Custodia, which became the first financial institution to receive a bank charter under the SPDI framework in October 2020, filed a lawsuit against the Federal Reserve and its Kansas City arm for delays in approving the bank’s application for a master account. In January 2023, the Fed officially rejected the bank’s application, stating it was “inconsistent with the required factors under the law”.
Hill argues that the Fed’s arguments suggest Custodia is akin to an uninsured institution “seeking to engage in multiple high risk endeavors in a high-risk industry”. The case is significant for financial institutions in the US seeking to provide crypto custody services under the federal or state system.