The Federal Reserve published its previously announced rejection of Custodia Bank’s application to become a member of the Fed system, citing the lender's management, financial condition and narrow focus on digital assets as reasons for its failure. 

“In general, the Board has heightened concerns about banks with business plans focused on a narrow sector of the economy,” the Fed’s decision document reads. “Those concerns are further elevated with respect to Custodia because it is an uninsured depository institution seeking to focus almost exclusively on offering products and services related to the crypto-asset sector, which presents heightened illicit finance and safety and soundness risks.”