John Deaton, a Pro XRP lawyer, is keenly interested in the Custodia Bank vs. Federal Reserve legal battle, suggesting it may hold even more weight than the high-profile XRP lawsuit. He commented on this statement while recently interviewing Catlin Long. Both have criticized the US regulator’s nasty role in suppressing the crypto industry. The case has more layers and will be his top priority after the XRP case. Do we smell a change in dynamics happening anytime soon?
What Happened so far?
Custodia Bank, founded by Bitcoin advocate Caitlin Long, was aimed to provide account services to crypto businesses and create a vital link to the US dollar. In October 2020, Custodia Bank applied for a Federal Reserve master account, which would grant access to the Fedwire network, the Federal Reserve’s extensive payment system. However, the Fed rejected the application in January 2023, citing concerns about the bank’s crypto activities.
However, in June 2022, the bank pursued legal action against the Federal Reserve for what they deemed an “unlawful delay” in considering their master account application.
Deaton Weighs In custodia’s Case Takes Center Stage
Speaking on this, Deaton analyzed the core problems in the entry and exit points (on-ramps and off-ramps) for cryptocurrencies by established financial institutions that could have far-reaching consequences for the entire crypto ecosystem. During the Mainnet conference, Jeremy Allaire opened an important fact that within seven days, 5000 companies were “de-banked,” raising a red flag. This event concerned Deaton in many ways. The question arises: Why is Custodia Bank’s battle for access a regulatory turning point?
Here, Deaton noted that Custodia Bank’s core argument is circling around the unjust denial of its master account request, a crucial element for full participation in the financial ecosystem like other fintech companies. Deaton, who has criticized almost all regulatory bodies, sees this case as shedding light on regulatory bodies falling short of their legal responsibilities, potentially prompting a shift in Federal Reserve conduct.
A Chilling Message to Entrepreneurs
Beyond this specific case, Deaton dug deep into the outcome of Custodia Bank vs. Federal Reserve, which could deeply influence current market sentiments. Overhauling and Denying Custodia Bank a master account might disrupt the entry of big institutions from the crypto market, potentially stifling innovation and competition. This underscores the immense importance of such legal battles, as Deaton actively engages in various crypto-related litigations and plans to expand the scope of CryptoLawUS.
At last, Deaton believes Custodia Bank’s success in court will set a precedent for significant claims in the crypto space, making it one of the most pivotal cases among ongoing crypto-related litigations involving Ripple, Coinbase, and Binance.
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