The Foreign Federal Reserve Federation rejected the application of Casstodina Bank to become a member of the Federal Reserve system software. The Fed meeting said in a statement that the application was "inconsistent with the elements required by national law." It also claimed that the Custodia's regulatory framework was "inadequate" and cited an earlier collaborative statement from the Federal Reserve meeting with the Federal Deposit Insurance Corporation and the Office of the Superintendent of Monetary Engineering, which found that encrypted assets were inconsistent with sound banking practices.

The bank said in a tweet that although it was rejected, the bank's overall account application was still waiting. The so-called "master account" enables banks to make international transfers and perform other key duties. Custodia, led by Caitlin Long, applied for a general account in 2020 and filed a lawsuit in June that the Fed's meeting delayed considering the application for a long time.

The Fed meeting gave the bank 72 hours to withdraw its application, Mr. Casstodina said in a statement. It added, "the Custodia is actively seeking federal regulation, far exceeding all the rules that apply to traditional banks."

The Fed meeting did not release its basic policy on granting main accounts until August, when it was clearly difficult for digital money banks to receive accounts. "organizations with time-limited activities to which the government is still developing a moderately stringent regulatory framework will accept a wider range of inspections," the Fed said in a statement before the meeting. "

Bank of New York City Mellon was granted data encryption escrow services by the Federal Reserve in October, making it the first key foreign bank to invest in hosting digital currency and traditional projects on the same software. Custodia Bank was founded in Wyoming in 2020, using the password-friendly state's 2019 criteria for the selection of blockchain technology banks.