The state of Wyoming is taking umbrage at the Federal Reserve Board’s insinuations that its regulatory framework for special purpose depository institutions (SPDI) – state-chartered banks that can handle digital assets – are not up to snuff.

Wyoming Attorney General Bridget Hill filed a motion with the U.S. District Court in Wyoming asking for permission to intervene in Custodia Bank’s lawsuit against the Federal Reserve Board and the Kansas City Fed (whose jurisdiction includes Wyoming) for delaying and ultimately denying the crypto-friendly bank’s application for a master account and membership with the Fed.

Though the Wyoming-based bank’s applications were denied in January, 18 months after the application was first filed, the Federal Reserve Board only made public its reasoning for the denial in an eviscerating 86-page report last month. The report condemned Custodia’s proposed business plan in every single category the Fed assesses, and claimed the decision not to federally insure deposits and Custodia’s dependence on a vibrant crypto market made it a danger to itself and its customers.

Custodia CEO Caitlin Long, who helped draft Wyoming’s crypto laws, has been vocal in her pushback against the Fed’s decision, citing Custodia’s proposal to be fully capitalized, holding $1.08 in cash for every dollar deposited by customers, and suggesting the real reason for denial is a Fed conspiracy to cut crypto off from the banking system.

(By Cheyenne Ligon)