By Michael Scott
Custodia Bank chief executive Caitlin Long questioned the Federal Reserve after the discovery of ‘interesting’ inclusion within the early adopters. She decried that Adyen was listed within the financial institutions labeled as early adopters of FedNow. Long illustrated that Adyen had, in July 2020, secured a federal master account 12 months before it established the US branch.
Long illustrated a peculiar development following the Federal Reserve announcing that FedNow went live to deliver instant payment service. The platform unveiled on Thursday, July 20, allows real-time money transfers across the entire interbank system.
Long Questions about the Credential of Amsterdam-based Adyen Inclusion in FedNow
Long pointed out that the Federal Reserve records capture Adyen among the 35 financial institutions accessing the FedNow service. The Custodia chief executive appears Adyen secured the federal master account in July 2020. She disapproves of the process utilized by the Federal Reserve since the approval occurred a year before the Amsterdam-based entity established a brand within the country.
Long questioned how the fintech firm could secure the Fed master account to qualify to facilitate clearance to US$ payments at the central bank. She wondered in a July 20 tweet why the Fed was deploying double standards since it had in the past kept fintech out.
Long criticism of the Federal Reserve arises from the long battle that Custodia Bank is battling in its quest for the federal master account. The chief executive has in the past indicated that securing the master account would enable Custodia to access the FedWire network. The platform is critical for the crypto bank considering that theFedWire network had in 2022 hosted 200 million transfers transacting over $1 quadrillion.
Custodia CEO Consider Fed as Making Rules Ambiguous
Long considers that the rules applied by the Fed to determine the institutions qualifying for approval to access the FedWire network need to be clearer. The Custodia executive admitted that the rules applied by Fed would be murkier considering that the Amsterdam firm even avoids the bank label in its press release.
Long would, in a subsequent tweet, criticize the Fed for noncompliance with the law. She illustrated the inclusion of Adyen violating the same laws it emphasizes enforcing. She noted that the European private firm could not satisfy the Federal Reserve’s requirements for offering payment services in the United States.
Repeated Rejection of Custodia by Fed Termed as Unlawful and un-American Conduct
Long concern arises from the repeated rejection of Custodia as qualified to secure the master accounts. She terms the refusal as both unlawful and exhibiting unAmerican conduct.
The conflict concerning the digital asset sector with regulators exceeds the Custodia versus Fed feud. The conflict involves several banks and firms with crypto-affiliation that have collapsed.
Long considers the rejection of crypto-affiliated banks mirrors the all-encompassing tirade deployed by the Securities and Exchange Commission (SEC) against crypto projects. The discovery of Adyen inclusion among the FedNow early adopters leaves several US fintechs angry for bending the rules.
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