Thread by @BigWhiskey_10

#telfam Continuing this thread for anyone keeping score. Read on:

#Telcoin $TEL

https://twitter.com/BigWhiskey_10/status/1589271591296245760

2) Firstly, a point of clarification: Regarding who would ultimately stamp the approval of @telcoin's master account with the Fed - The Federal Reserve Bank of Kansas City overseas that part of the country. federalreserve.gov/aboutthefed/fe…

#Telcoin $TEL

3) However, the CEO of Fed Bank Kansas is a member of the FOMC so it would be hard to imagine the overarching ‘Board of Governors’ isn’t involved in the decision, given the spotlight on it.

#Telcoin $TEL

4) Also, it's important to note that this past October, the Fed did approve BNY Mellon to custody crypto for its customers (first bank with master account to do so) observer.com/2022/10/americ…

#Telcoin $TEL

5) That said, BNY Mellon is obviously not Crypto-first so I think they're running in a different race - one against other long-standing institutions.

#Telcoin $TEL

6) In response, 7 lawmakers submitted amicus briefs in support of Custodia and called out the Fed publicly for ‘playing favorites’ coindesk.com/policy/2022/09…

#Telcoin $TEL

7) It’s unclear if those lawmakers are just trying to support the space in general or if they have any vested interest in Custodia’s approval.

#Telcoin $TEL

8) But in terms of which CRYPTO Bank will get the first master account from the Fed, the Fed’s latest guidelines outlined a tiered approach to the review process:
//www.federalreserve.gov/newsevents/pressreleases/files/board-memo-20220815.pdf

#Telcoin $TEL

9) Tier 1 (easiest review) is for banks that are federally insured.

#Telcoin $TEL

10) Tier 2 (intermediate review) is for banks that are NOT federally-insured, but (i) ARE subject by law to Fed supervision; and (ii) any holding company subject to Federal Reserve oversight by law or commitments

#Telcoin $TEL

11) Tier 3 (strictest review) is for banks that are NOT federally insured and NOT subject to Fed supervision at bank or holding company level.

#Telcoin $TEL

12) General sentiment seems to be that crypto bank applicants would fall into Tier 3, making it especially difficult for them (likely by design).

#Telcoin $TEL

13) If we're looking for possible advantages @telcoin may have vs the other two crypto bank applicants (Custodia, Kraken), we could speculate around a few:

#Telcoin $TEL

14) 1st possible advantage: @telcoin figured out a way to qualify for a Tier 2 review. This could be another reason for partnering/owning shares in an FDIC insured bank, if doing so moved them under Federal oversight and thereby, qualified them for Tier 2.

#Telcoin $TEL

15) 2nd possible advantage: @telcoin’s General Counsel and Chief Compliance Officer was a former SEC attorney working in Enforcement (though it was 25 years ago). linkedin.com/in/tim-mahota-…

#Telcoin $TEL

16) As far as I can tell, neither Kraken or Custodia have anyone with former SEC ties on their compliance teams.

#Telcoin $TEL

17) 3rd possible advantage: @telcoin is the only #DeFi company among these 3 Crypto Banks.

#Telcoin $TEL

18) In light of recent crypto events, it can’t be understated how important decentralization is for the future of digital assets.

#Telcoin $TEL

19) If being #DeFi does not end up helping @telcoin be the 'First Fed Approved Crypto Bank', they would still be the 'First Fed Approved #DeFi Bank' which could be equally as historic/nationally publicized.

#Telcoin $TEL

20) As far as timing around the Fed approvals, the law states that, in general, the Fed must take final action on any application before the end of the 1-year period. uscode.house.gov/view.xhtml?req…

#Telcoin $TEL

21) Assuming @telcoin submitted their Fed application the same day they received a state bank charter, AND assuming they received a bank charter before the end of 2021 (LB649 was officially operative in on 21-Oct-2021), legalink.ch/groups/newslet…

#Telcoin $TEL

22) ..their 1-year Fed period could be ending soon.

#Telcoin $TEL

23) Of course, as we saw with Custodia/Kraken, who both submitted their applications in 2020, the Fed can apparently just ignore that law without consequence. And FTX has just given them ammo to push it out even further.

#Telcoin $TEL

24) SO, while there's hope it could happen this year, it's anyone's guess as to when we might actually start seeing Fed master accounts approved for crypto banks.

#Telcoin $TEL

25) That said, one could speculate that smart money is watching what's happening while everyone else is distracted elsewhere.

#Telcoin $TEL

*overstated