Former US Official Accuses Regulators of Targeting Crypto with ‘Debanking’ Campaign
A former United States government official has accused federal regulators of targeting the cryptocurrency industry through a campaign of “debanking.”
Donald Verrilli, who served as the solicitor general of the United States from 2011 to 2016, raised these claims in a recent amicus brief, where he represented the Blockchain Association in support of Custodia Bank’s appeal to the U.S. Tenth Circuit Court of Appeals.
Custodia Bank had applied for a master account in October 2020 and subsequently filed a lawsuit against the Federal Reserve in June 2022, alleging an “unlawful delay” in processing its application.
However, the Fed rejected Custodia’s request in 2023, citing the bank’s connections to the cryptocurrency space.
A judge upheld the Fed’s decision in March 2024, denying Custodia the opportunity to have its application reviewed.
Verrilli’s filing asserted that Custodia’s application was caught up in the regulators’ aggressive and coordinated efforts to “debank” the digital asset industry.
He referred to statements made by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency in January 2023, which claimed that cryptocurrencies were likely inconsistent with safe and sound banking practices.
The Fed’s rejection of Custodia’s application followed these coordinated statements from the federal regulators.
Verrilli argued that Custodia had become the target of federal banking regulators’ campaign to isolate the digital asset industry from the broader national economy, despite having no fault of its own.
Other parties, including former U.S. Senator Pat Toomey, Wyoming Secretary of State Chuck Gray, and members of the U.S. Senate Banking Committee and U.S. House Financial
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