caitlin long at fintech nexus usa 2022

Custodia Bank goes live

The road has been a long one for Custodia Bank. 

Conceived under the name Avanti Financial Group, the idea was simple; to be the bank that provided a “compliant bridge” between the US Dollar payments system and digital assets custody. 

Caitlin Long, founder, and chief executive officer of Custodia Bank, stated that access to tech-forward U.S. dollar banking services and access to digital assets had traditionally been kept separate. “Additionally, few banks in the U.S. operate on API-based core banking platforms. These platforms are a necessary bridge between traditional and digital asset systems. Custodia was purpose-built to bridge the two worlds in a safe and sound manner.”

However, it’s an idea that has been met with friction. 

Now, almost three years after initially being granted the Wyoming Bank Charter under the SPDI framework, Custodia Bank has gone live. On Friday, August 11, 2023, the bank announced its official launch to business customers. 

“We got our bank regulator’s approval to take customer funds,” said Long. She emphasized that “The bar is very high for banks to launch, and we cleared it.”

The bank is now accepting US deposits from business accounts and, subject to approval, will custody Bitcoin.

“Quite a journey”

Custodia Bank expected to launch much earlier but has faced subsequent setbacks. 

Originally stating that it “could be open for business” in October 2020, timelines for launch have been pushed back yearly. An almost audible sigh of relief was therefore heard in the bank’s announcement on Friday.

In January and March of this year, Custodia was rejected by the Federal Reserve for inclusion in the Federal Reserve System. The bank originally submitted applications to the Federal Reserve for supervision and insurance in late 2021. 

The ruling was made due to “safety and soundness risks” that the Fed determined were posed by the banks’ involvement with digital currencies. The bank has since vocalized its view on inconsistencies between the Fed’s rejection of Custodia and its subsequent approval of other banks entering the crypto space. 

Following the Fed’s March rejection embarked on a legal battle against the regulatory body. “The Fed and the Kansas City Reserve Bank refused to follow the law, leaving Custodia no choice but to sue,” the bank wrote in a statement.

“Digital assets are not going away, and neither is Custodia. Already today, the world’s 8 billion people can create and transact U.S. dollars simply by running code on a smartphone. The only question is how fast the change will happen. Custodia will continue to forge ahead at a time when disruption reigns supreme in banking,” the statement continued.  

RELATED: Custodia Bank rejection: What’s next?

“It’s been quite a journey for Custodia,” wrote the company in a Tweet on Friday. 

The bank then reiterated its commitment to providing simultaneous access to the digital assets industry and banking infrastructure within a regulated environment. 

“In December, we told the Fed we’d complete a task list. Even though no longer required, we still did it. Since then, we passed a myriad of independent reviews, built new partnerships & built a new service to meet a market need,” the tweet continued.  

While Bitcoin custodial services are still yet to receive final regulatory clearance, Custodia has stated they will be taking a “slow and careful approach” to the launch. The bank will initially open in only a few states. 

  • Isabelle Castro Margaroli

    Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.

    Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.

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