“The law is very clear,” says Custodia Bank CEO Caitlin Long, except when it comes to the Federal Reserve.
Among the 35 early adopter banks and credit unions that have received access to The new FedNow Around-the-clock payment system On Thursday, one name stood out: Amsterdam-based Adyen.
Long said decode that the financial technology firm obtained a banking license in Europe (something common in the EU), then “backslided into the system,” calling it “very Un-American” for a European company to get a seat while American firms cannot.
This has led him to frankly claim that the Fed is “not enforcing the law.”
Long wants her bank, Custodia, to be granted a federal payments charter in the US and is leading a melee on access to the FedWire network, which handled over $1 quadrillion in 2022. It is currently in the middle of a lawsuit against the Federal Reserve, which Long says is trying to make an example of Custodia and trying to scare it into “turning tail and running.”
Custodia is tied to eight other fintech firms — four of which work in the crypto industry — that have valid cards but are also being blocked by the Fed from buying a master account. Long wrote a blog post titled “This is where Fintech Banks come in,” which tells the story of these companies left out in the cold by the Fed.
A longtime attorney, Long said “this is all bigger than crypto.” On the other hand, she noted, the crypto industry could be the one to end government overreach. Crypto companies like Ripple, for example, are engaging in what she calls “bet-the-farm”-style lawsuits — and the court system seems to be moving closer to crypto.
The current system is also adding additional costs and friction to the industry, Caitlin said decode, showing in a blog post from the Wire that claimed “Fed Charges Banks a Fraction of a Cent to Send ACH Payments, But Banks Charge Their ACH Customers a 100x Increase.”
Despite her bank’s struggle for a major account, Caitlin thinks young FedNow service missing. “It’s not interoperable, cross-border and has a strict transaction payment limit of $500,000,” claiming it will capture 10% of payments, “but no more than that.”
“This will all play out in the courts,” she projects, with Custodia involved as one of the two assets ACTIONS and much more likely to follow.
Long said decode that the Fed claims it will help companies regulate and that Custodia has “bent over backwards to comply” but that the authorities have become an “immovable mountain”.
Despite the Fed’s “reckless disregard for the law” and the frustration she’s faced over the years with Custodia, Long admits she’s “having fun.”