Donald Verrilli, the former U.S. Solicitor General from 2011 to 2016, has asserted in a legal document that there has been a deliberate and concerted effort by federal authorities to exclude the cryptocurrency industry from banking services.
In an amicus brief dated July 3, submitted to the U.S. Tenth Circuit Court of Appeals, Verrilli advocated on behalf of the Blockchain Association, supporting Custodia Bank’s appeal. This followed a March ruling by the U.S. District Court for the District of Wyoming, which prompted Custodia to contest the Federal Reserve’s refusal to grant the bank a master account.
**Case Background:**
Custodia sought a master account in October 2020 and initiated legal action against the Federal Reserve in June 2022, accusing it of unlawfully stalling the application process. The Fed dismissed Custodia’s request in 2023, pointing to the bank’s ties to the cryptocurrency sector as the reason. In March 2024, a judge upheld the Fed’s stance, denying Custodia the chance for a review of its application.
“Regrettably, Custodia’s application became ensnared in the aggressive, orchestrated push by federal regulators to marginalize the digital asset sector from banking,” Verrilli remarked in the July 3 filing.
Source: PACER
Representing the Blockchain Association, Verrilli referenced statements made in January 2023 by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. These statements suggested that involvement with cryptocurrencies was likely at odds with prudent banking practices, leading to the Fed’s denial of Custodia’s master account application.
Verrilli further noted:
Several entities have submitted amicus briefs echoing support for Custodia’s appeal, among them former U.S. Senator Pat Toomey, Wyoming Secretary of State Chuck Gray, and members from both the U.S. Senate Banking Committee and the U.S. House Financial Services Committee. Paul Clement, another ex-U.S. Solicitor General, presented a brief on behalf of the Digital Chamber and Global Blockchain Business Council, indicating that Custodia has fallen out of favor with federal regulators.
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The timeline for the appellate court’s decision on Custodia’s request remains uncertain. The judges might also take into account a recent Supreme Court ruling from June 28 that overturned the Chevron doctrine. This landmark decision reversed the practice of courts deferring to federal agencies’ legal interpretations, which could influence the Federal Reserve’s verdict regarding Custodia’s master account application.
On July 10, the U.S. House of Representatives is set to revisit a resolution aiming to annul an accounting regulation by the Securities and Exchange Commission, which has barred banks from engaging with cryptocurrencies. Although the resolution initially secured approval in both the House and Senate, it was vetoed by President Joe Biden in May. The House retains the ability to override the veto with a two-thirds majority.
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