Custodia Bank Petitions for Full Appellate Rehearing Over Regulatory Authority
Custodia, a Wyoming-chartered cryptocurrency bank, filed a petition asking all appellate judges to reconsider a three-judge panel's decision, arguing the ruling undermined state banking authorities. The bank contends the decision raises constitutional concerns about the balance of regulatory power.
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The Petition
Custodia filed a petition for rehearing en banc, asking the full appellate court to revisit a prior three-judge panel decision. The bank argues the panel's ruling improperly limited the authority of Wyoming's state banking regulator, according to court filings and reporting.
Constitutional Arguments
Custodia characterized the panel's decision as raising "serious constitutional questions" about the proper division of power between state and federal regulators. The bank contends that state banking authorities should retain meaningful discretion over charter approvals for institutions operating within their jurisdiction, and that the panel's reasoning encroached on that authority.
Regulatory Context
Custodia has faced a protracted regulatory battle since its 2019 founding. The case reflects a broader tension in crypto regulation: whether state-chartered banks can operate digital asset services under existing banking law, or whether federal regulators and courts view such activities as requiring additional oversight or rulemaking before approval.
Why It Matters
For Traders
A successful rehearing could clear a path for Custodia to launch or expand services, but the timeline remains uncertain and regulatory risk remains material.
For Investors
The outcome may establish precedent for how state charters interact with federal banking oversight in crypto, influencing other state-charted digital asset firms.
For Builders
If Custodia prevails, it may create a viable regulatory pathway for protocol teams seeking compliant custody and settlement infrastructure in the U.S.
This article is for information only and is not financial advice. Read the full disclaimer.
