Regulation
Custodia Bank Hires Ex-Obama Solicitor in Stablecoin Appeal
Custodia Bank, formerly Avanti Bank, has upped its legal fight with the Federal Reserve by engaging the services of former acting solicitor general under President Barack Obama, Ian Gershengorn, and ex-solicitor general of Virginia, Michelle Kallen.
This follows after Custodia demanded the reversal of the Federal Reserve decision denying it direct access to the payment systems and membership in the Federal Reserve system. This step shows that the bank wants to strongly contest the ruling, which it sees as a vital impediment to its activities and expansion in the digital asset area.
“Now, @custodiabank is pulling out some big guns to fire back…“This team brings a deep understanding of #federalism issues & extensive experience in federal regulation of [#digitalassets]. They also have a stellar appellate track record in government controversy cases.”” https://t.co/O6pFi8accC
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) May 6, 2024
The fact that the legal team has extensive knowledge in government regulatory issues and federalism is also likely to enhance Custodia’s appeal. Their recent participation in significant causes, for example, Kallen’s representation of the Select Committee to Investigate the January 6th Attack on the United States Capitol, demonstrates the seriousness with which Custodia approaches this litigation.
Caitlin Long, CEO of Custodia, stressed that the team’s deep experience in federal regulation of digital assets and their successful appellate track record makes them the best choice for this critical legal challenge.
Federal Reserve’s Denial and Custodia’s Response
In January, the Federal Reserve declined Custodia’s applications for a Master Account and Fed Membership, highlighting substantial deficiencies in the bank’s risk management and compliance with the banking law especially relating to money laundering. This verdict followed an 18-month review period in which Custodia contended that the Fed delayed the process of the application illegally and demonstrated prejudice to digital assets.
Of particular concern to the Fed was Custodia’s business model, where it functioned like an uninsured bank but kept cash and other assets to fully back its stablecoin issuance. The central bank claimed that such an approach could escalate the possibility of runs and contagion due to dependence on the volatile market for the crypto assets.
The bank’s idea to release stablecoins backed with cash reserves was the most problematic issue for the bank to get integrated into the Fed’s payment systems. However, the Custodia Bank, last week, filed a notice of intent to appeal against the Federal Reserve’s rejection of its master account application, as reported by Coingape.
Broader Impact on the Crypto Banking Sector
The refusal of the Federal Reserve to approve the application made by Custodia is an echo of a more general regulatory skepticism about the inclusion of cryptocurrency business within the traditional banking system.
This warning has been amplified by the recent actions against other crypto-friendly financial institutions after the infamous failures of Silicon Valley Bank and Signature Bank. These have created further apprehension about the stability of banks with substantial cryptocurrency activities.
Stakeholders in the crypto industry are watching the language of the Fed in relation to stablecoins and the broader implications for banks involved with digital assets. The comments of the Fed indicate a conservative approach to the fact of crypto-banks getting access to essential financial infrastructure, which can become a standard that will affect the approaches of other institutions to digital asset integration.
The legal battle between Custodia and the Federal Reserve plays out in the context of escalating volatility in global banking, especially for entities heavily engaged in cryptocurrencies.
Read Also: India Plans Offline CBDC Accessibility, RBI Governor Says Citing Potential Risks
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Cryptocurrency investors in Japan are bracing for impact following a plan to reclassify digital assets as financial products. While the plan has elicited excitement from cryptocurrency enthusiasts in the Far East, the ambitious plan will have to scale several legislative hurdles.
Japan Targets Reclassification Of Cryptocurrencies As Financial Products
According to a report by Nikkei, Japan’s Financial Services Agency (FSA) is inching toward classifying cryptocurrencies as financial products. Per the report, the FSA intends to achieve the reclassification via an amendment to the Financial Instruments and Exchange Act.
Currently, digital assets in Japan are considered crypto assets conferred with property rights and seen as payment means. Under the FSA’s plans, cryptocurrencies in Japan will be treated as financial products in the same manner as traditional financial products.
The FSA says it will adopt a slow and steady approach toward the reclassification, carrying out “a private expert study group” to test the waters. If everything goes according to plan, the FSA will submit the amended bill to Parliament in early 2026.
The classification of cryptocurrencies as financial products will have far-reaching consequences for the local ecosystem. Experts say treating cryptocurrencies as financial products will bring Japan closer to a crypto ETF launch amid a changing regulatory landscape.
Furthermore, the move may lower current cryptocurrency taxation for local investors since existing capital market rules will apply to the asset class.
A Fresh Bill For Crypto Insider Trading Is Underway
Apart from the reclassification, the FSA disclosed plans for new legislation against insider trading. The move flows treating cryptocurrencies as financial products and will strengthen existing investor protection rules.
“It is a direction to establish a new insider trading regulation that prohibits trading based on unpublished internal information,” said the FSA. “We will develop laws to prevent unfair transactions.”
However, Japan’s cryptocurrency scene is heating up to a boil, driven by local and international players. Last week, stablecoin issuer Circle secured approval from the FSA for USDC with top exchanges set to list the stablecoin.
Japan’s Metaplanet has tapped Eric Trump to join its Strategic Board of Advisors as it continues to load up Bitcoin.
Aliyu Pokima
Aliyu Pokima is a seasoned cryptocurrency and emerging technologies journalist with a knack for covering needle-moving stories in the space. Aliyu delivers breaking news stories, regulatory updates, and insightful analysis with depth and precision. When he’s not poring over charts or following leads, Aliyu enjoys playing the bass guitar, lifting weights and running marathons.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
In what is being dubbed a major development in the crypto regulation space, the Governor of the US state of Kentucky, Andy Beshear, has signed the ‘Bitcoin Rights’ bill into law. The law promises to safeguard protections for Bitcoin (BTC) users.
Bitcoin Rights Bill Comes Into Effect
Crypto regulations continue to evolve under pro-crypto US President Donald Trump’s administration. In the latest development, Kentucky has become the newest state to enshrine protections for digital asset users.
In an X post published on March 24, crypto advocacy group Satoshi Action Fund announced that Governor Beshear had signed the much-anticipated Bitcoin Rights bill into law. The post stated:
The right to self-custody, run a node, and use of digital assets is now protected for millions of Americans without fear of discrimination.
The bill was first introduced to the Kentucky House by Rep. Adam Bowling on February 19. According to the bill’s description, it seeks to safeguard users’ rights to use digital assets and self-custody wallets. Additionally, it aims to prohibit local zoning changes that discriminate against crypto mining operations.
The legislation outlines guidelines for running a digital asset node and excludes digital asset mining from money transmitter license requirements. It also clarifies that crypto mining or staking is not considered an offer or sale of securities.
On February 28, the bill passed Kentucky’s House of Representatives with a unanimous vote of all 91 representatives in favor. It later passed the Kentucky Senate on March 13, receiving backing from all 37 senators.
Kentucky’s proactive stance toward cryptocurrencies isn’t new. Earlier this year, the state became the 16th US state to introduce legislation seeking to create a Bitcoin strategic reserve.
Meanwhile, neighboring state Arizona is also joining the crypto movement. A recent X post by Bitcoin Laws revealed that Arizona’s House Rules Committee has passed two Bitcoin reserve bills — SB1373 and SB1025. These bills will now head to a full floor vote.
Renewed Optimism Under Trump Administration
Following Trump’s victory in the November presidential election, cryptocurrency regulations in the US are evolving rapidly, with many states introducing legislation aimed at strengthening their digital asset ecosystems and attracting crypto businesses.
Positive changes in crypto regulations are encouraging industry businesses to expand. For instance, leading crypto trading platform Coinbase recently announced plans to hire 1,000 employees in the US.
The Trump administration has also witnessed several lawsuits being dropped against major crypto entities, including Kraken, Coinbase, Gemini, and others. At press time, Bitcoin trades at $87,399, down 0.2% in the past 24 hours.
Featured Image from Unsplash.com, chart from TradingView.com
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Hawk Tuah girl Hailey Welch, known for her association with the controversial $HAWK token, has been cleared of any wrongdoing after a lengthy investigation by the U.S. Securities and Exchange Commission (SEC). The SEC has decided not to press charges against Welch in connection with the rapid rise and subsequent collapse of the meme-based cryptocurrency.
US SEC Investigation Into Hawk Tuah Girl Concludes Without Charges
The SEC had launched an investigation into the $HAWK token after its dramatic price drop. The token, which was linked to Welch’s viral persona, initially saw a market cap surge to $490 million before crashing by over 90%. Investors who were impacted by the crash filed a lawsuit against those behind the project, alleging that the coin had been promoted and sold without proper registration.
Hawk Tuah girl Hailey Welch, who cooperated fully with the investigation, expressed relief after the SEC’s decision. “For the past few months, I’ve been cooperating with all the authorities and attorneys, and finally, that work is complete,” Welch told TMZ.
Her attorney, James Sallah, confirmed that the SEC had closed the case without any findings against her, adding that there would be no monetary sanctions or restrictions on Welch’s future involvement in cryptocurrency or securities.
This Is A Developing News, Please Check Back For More
Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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