Thread by @BigWhiskey_10

#telfam The more I read up on it, the more it seems that the timing of @telcoin's Federal approval hinges on the outcome of the Custodia case against the Fed.
So let's get into the weeds on that. Read on:

#Telcoin $TEL

https://twitter.com/BigWhiskey_10/status/1592256821695336448

2) The latest news is U.S. District Court of Wyoming Judge Scott Skavdahl ruled this past Friday (11-Nov) that Custodia’s case warrants a trial.
bankingdive.com/news/custodia-…

#Telcoin $TEL

3) The Fed argued that the 2 year delay in approving Custodia is not unreasonable because digital asset banks “present substantial risks and complexities requiring careful and diligent review.”

#Telcoin $TEL

4) Additionally, they asked to have the ‘Board of Governors’ removed from the lawsuit because the Reserve Banks have ‘full discretion’ over master account approvals.

#Telcoin $TEL

5) When denying the Fed's motion for dismissal, the judge stated: "the Court has little difficulty concluding Custodia has asserted a plausible cause of action for unreasonable delay against The Fed and the Kansas City Fed."

#Telcoin $TEL

(6) They also concluded it was "reasonable to infer that the Board intervened" because the Kansas City Fed had already (allegedly) confirmed Custodia's eligibility and saw "no showstoppers" with their application.
law360.com/articles/15490…

#Telcoin $TEL

7) The Fed’s options are now:

(a) settle out of court
(b) go to trial

#Telcoin $TEL

8) If they go to trial, the Fed will have to defend their assertion that (i) Reserve Banks have autonomy to approve master accounts, (ii) that they are not subject to the 1-year time period in this case, and (iii) that the Board of Governors did not intervene.

$TEL

9) Option A would hopefully mean we see Fed master account approvals soon.

#Telcoin $TEL

10) Option B would likely mean a much longer wait for any Federal crypto bank approvals.

#Telcoin $TEL

11) That said, I can’t imagine the Fed would be too excited about the prospect of putting their actions to date, which (IMO) seem to point to clear favoritism and overreach, under a microscope in a prolonged trial.

#Telcoin $TEL

12) BUT, it’s worth noting that there have only ever been two other challenges to the Fed's master account practices. Both were dismissed. americanbanker.com/news/key-issue…

#Telcoin $TEL

13) Additionally, in light of recent events, the Fed has bolstered their argument that they had reasonable cause to take extra time to deliberate around crypto bank applications, citing the FTX fiasco (whether it’s actually relevant or not).

#Telcoin $TEL

14) So what happens next is anyone's guess.

#Telcoin $TEL

15) On one hand, the Fed may be forced by the courts (via settlement or trial) to approve Custodia’s master account ahead of other applicants.

#Telcoin $TEL

16) On the other hand, the Fed could decide to make an example of Custodia and drag out the proceedings as much as possible due to the dangerous precedent it would set otherwise: ‘if you don’t get what you want from the Fed, sue them.’

#Telcoin $TEL

17) To their credit and true to their word, all indications are that @telcoin has taken a much less-hostile/more-collaborative approach with federal regulators compared to Custodia and Kraken.

#Telcoin $TEL

18) If that ends up playing as a factor, and the Fed refuses to concede to companies that take a more hostile approach, @telcoin may yet come out on top.

#Telcoin $TEL

19) As the saying goes, “the first guy through the wall always gets bloody.” In any case, when it’s all said and done, @telcoin will have Custodia to thank for that.

#Telcoin $TEL