The Fed’s Alleged Targeting of the Crypto Sector
A crypto legal expert, James “MetaLawMan” Murphy, has raised concerns about the United States Federal Reserve (Fed) and its alleged involvement in “Operation Chokepoint 2.0,” which is said to be targeting the cryptocurrency industry.
The Fed’s Handling of Custodia Bank’s Application
Murphy’s focus is on how the Federal Reserve handled Custodia Bank’s application for a master account. This account is crucial for banks to access essential services like check clearing and wire transfers. Federal law states that any federal or state-chartered depository institution should be granted a master account. As a Wyoming-chartered institution, Custodia Bank was eligible for this account.
However, instead of the typical processing time of 5-7 business days, Custodia Bank experienced an unexplained delay of 20 months. After filing a lawsuit against the Fed, they were ultimately rejected eight months later. Murphy suggests that this delay and denial pattern reflects a coordinated effort to limit the integration of digital assets into traditional banking.
The Fed’s U-Turn on Crypto
During Custodia’s lawsuit, discrepancies were discovered between the assessments of the Kansas City Fed and the Federal Reserve in DC. The Kansas City Fed initially found Custodia’s capital, risk management practices, liquidity risk, and management team to be positive. However, these findings were reversed in the final report by the DC Fed.
Murphy highlights the changes made in the report: capital requirements were labeled as lacking, risk management gaps were deemed significant, liquidity risk management processes were considered insufficient despite a fully reserved model, and management experience was seen as lacking relevant banking experience.
This biased revision led to the Fed’s decision to deny Custodia’s application, indicating a deliberate bias against cryptocurrency-related services, according to Murphy.
The Fight for Recognition and Integration
The Blockchain Association and the Wyoming Attorney General supported Custodia’s case by filing amicus briefs in their motion for summary judgment. Murphy sees this legal battle as emblematic of the broader struggle for recognition and integration of the crypto industry within traditional finance.
Murphy commends Custodia CEO Caitlyn Long for her resilience and determination in this fight, stating that it extends beyond Custodia and is a fight for the rights of the entire cryptocurrency sector and the principle of financial freedom. The hope for the crypto industry is that Long will succeed against all odds.
Hot Take: The Fed’s Alleged Bias Against Crypto
James “MetaLawMan” Murphy has raised serious concerns about the United States Federal Reserve’s alleged targeting of the cryptocurrency sector in “Operation Chokepoint 2.0.” The handling of Custodia Bank’s application for a master account, along with discrepancies in assessments between different branches of the Federal Reserve, suggests a deliberate bias against cryptocurrency-related services.
This case represents a larger struggle for recognition and integration of the crypto industry within traditional finance. With support from organizations like the Blockchain Association and legal experts like Murphy, there is hope that this fight will lead to greater opportunities and financial freedom for the entire cryptocurrency sector.
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