Special-purpose depository institution Custodia Bank said it has officially launched in certain states to serve U.S.-based business customers.

Background: Custodia, which focuses on crypto services and other novel activities and is not FDIC-insured, will operate as Custodia Bank Inc. in nine states. The company also operates as Custodia Digital Services Inc. in nine other states, and it does not operate in the remaining 32 U.S. states.

Master Account Denial: The Wyoming-based institution is suing the Federal Reserve for denying its application to become a Fed member and to have a master account with the Kansas City Fed. ICBA commended the Fed’s response to the Custodia application in a national news release, saying the agency’s actions appropriately safeguard the banking system from the risks posed by institutions with novel charters and the crypto sector.

ICBA View: ICBA has repeatedly called on policymakers to ensure new policies directed at the crypto sector fully reflect its risks, to prioritize research on the specific effects of digital assets on community banks and their customers, and to oppose the formation of a U.S. central bank digital currency.