Custodia Bank
| Formerly | Avanti Bank |
|---|---|
| Company type | Privately held company |
| Industry | Financial services |
| Founded | 2020 |
| Founder | Caitlin Long |
| Headquarters | , |
Area served | Wyoming |
| Products | Crypto currencies, custodian bank |
Number of employees | 36 (2024) |
| Website | custodiabank |
Custodia Bank, initially known as Avanti Bank, is a U.S. financial institution based in Wyoming that focuses on Cryptocurrency. Established in 2020, it obtained a banking charter from the state of Wyoming but has encountered obstacles from federal regulators. As of 2025, the bank remains largely inactive while addressing these regulatory challenges.
Establishment and regulatory environment
Wyoming’s legislature sought to position the state as a leader in cryptocurrency by enacting statutes that allow for state-chartered crypto banks, termed Special Purpose Depository Institutions (SPDIs).
Caitlin Long, the bank’s founder, played a pivotal role in shaping Wyoming’s crypto banking framework, enabling Custodia to operate under legislation favorable to digital asset financial services.
Following receipt of its Wyoming charter in 2020, Custodia secured $37 million in venture capital funding. Despite this, federal regulatory opposition has hindered its ability to fully commence operations.
Some critics argue that the legislation primarily benefits major cryptocurrency companies rather than fostering broad-based financial innovation. Custodia is one of only four SPDIs licensed in Wyoming but has remained mostly inactive pending approval from the Federal Reserve.
Litigation involving the Federal Reserve
On January 27, 2023, Custodia’s application for membership in the Federal Reserve System was rejected by the Federal Reserve Board due to "significant safety and soundness risks." This decision heightened doubts about the prospects for crypto banking within Wyoming. Concerns cited included potential circumvention of conventional regulatory oversight, risks related to money laundering and financial stability stemming from Custodia’s fee-based business model, absence of FDIC insurance coverage, and acceptance of cryptocurrencies like Bitcoin and Ether as deposits.
In June 2022, Custodia initiated legal action against the Federal Reserve Board and the Federal Reserve Bank of Kansas City, alleging unreasonable delays in processing its application. The bank’s lawsuit invokes the Monetary Control Act of 1980, which it interprets as guaranteeing all banks access to Federal Reserve services—a stance supported by digital asset advocates and bipartisan legal experts but contested by regulatory authorities.
A judicial ruling against Custodia was issued in March 2024; the bank is currently appealing before the U.S. Court of Appeals for the Tenth Circuit. By late 2024, Custodia had reduced its workforce from 36 to 27 employees to conserve resources amid ongoing litigation. CEO Caitlin Long attributed these layoffs to what she terms "Operation Choke Point 2.0," describing it as a federal initiative aimed at constraining cryptocurrency companies.
Leading banking associations such as the American Bankers Association and Wyoming Bankers Association have expressed support for the Federal Reserve’s stance, asserting that granting Custodia access could jeopardize the stability of the broader financial system.