Legal Battle Between Custodia Bank and Federal Reserve Draws Attention with Amicus Briefs

The ongoing legal battle between Custodia Bank and the Federal Reserve has entered the active appeal stage at the Tenth Circuit, attracting significant attention from various parties and legal experts. The involvement of multiple amicus briefs filed on July 3rd has added depth to the case, with top-flight appellate attorneys and former Solicitors General joining the fray.

Constitutional Arguments Take Center Stage

One of the standout briefs in the case was filed by former Solicitor General Paul Clement on behalf of The Digital Chamber and The Global Blockchain Business Council. Clement’s brief delves deep into constitutional arguments, particularly focusing on the Appointments Clause of the U.S. Constitution.

Clement argues that the Federal Reserve’s current structure violates the Appointments Clause by allowing individuals with substantial regulatory power to be appointed without following the constitutional procedures. This lack of adherence to constitutional principles undermines the legitimacy of the Federal Reserve’s actions, including the denial of Custodia’s master account application.

The brief also emphasizes the importance of judicial review in curbing administrative overreach and ensuring that federal agencies operate within their statutory and constitutional limits. By challenging the Federal Reserve’s actions on constitutional grounds, Clement’s brief sets a precedent for future cases involving federal regulatory agencies.

Advocating for Financial Innovation and State Sovereignty

Other amicus briefs, such as those filed by the Blockchain Association, Wyoming Attorney General, Americans For Prosperity Foundation, and members of Congress, focus on different aspects of the case, including the impact on financial innovation, state sovereignty, and regulatory consistency.

The Blockchain Association’s brief highlights the importance of innovation in the financial sector and argues that the Federal Reserve’s denial of Custodia’s master account application hampers technological advancements and limits financial inclusion. Similarly, the Wyoming Attorney General’s brief defends the state’s regulatory framework and emphasizes the need to respect state sovereignty in financial regulation.

The Americans For Prosperity Foundation’s brief advocates for non-discriminatory access to Federal Reserve services and underscores the importance of transparency and accountability in regulatory actions. The Congressional brief raises concerns about statutory overreach and the impact of the Federal Reserve’s actions on financial stability and innovation.

Overall, the amicus briefs in Custodia’s appeal present a diverse range of arguments against the Federal Reserve’s actions, highlighting the broader implications for financial regulation, state sovereignty, and constitutional principles. As the legal battle continues, these arguments will play a crucial role in shaping the future of financial regulation in the United States.