The CEO of Wyoming crypto bank Custodia has alleged that the Federal Reserve bent rules in granting access to its new instant payment system FedNow to at least one non-U.S. company.
Caitlin Long took to Twitter soon after the Fed launched FedNow on July 21, noting that Adyen, one of the early adopters listed for the new system, had received a Federal Reserve master account as early as July 2020. A master account provides access to the Fedwire funds transfer network.
Long questioned how a non-bank company like Adyen could have gotten a Fed master account so early. Adyen, based in Amsterdam, was not approved for a U.S. branch until 2021.
In a Twitter thread, Long wrote:
“How does a fintech even have a Fed master account so it can qualify to clear US$ payments at the Fed–isn’t the Fed keeping fintechs out?”
Long has been trying for years to obtain a master account for her own crypto bank, Custodia, but says the Fed’s rules around account eligibility have been unclear and restrictive for new types of financial institutions.
She argued that Adyen’s inclusion as a FedNow provider fails to meet the Fed’s own requirements and shows the Fed is “not complying with the law.” Long said the situation is “unlawful” and “un-American.”
The Federal Reserve did not respond to a request for comment from Decrypt, which first reported ↗ on Long’s allegations.
Long’s frustration comes amid a wider conflict over the Federal Reserve’s approach to digital assets and financial innovation. Several crypto banks and companies have collapsed in 2022, while the SEC has ramped up enforcement actions against crypto projects.
Long said “U.S. fintechs must be livid” at Adyen allegedly receiving preferential treatment. She argues that new types of financial institutions should have fair and transparent access to the Fed’s payment systems if they meet appropriate standards.
Whether Long’s allegations are valid remains to be seen. The Fed has not yet provided any clarification on Adyen’s early access to a master account or addressed Long’s criticisms. But the situation underscores tensions between legacy financial gatekeepers and disruptive new entrants seeking equal access to the financial system.
The claims also shed light on lingering questions about transparency, fairness and due process as FinTechs and crypto firms navigate rules originally designed for traditional banks. How these issues are resolved could determine whether today’s financial innovation can fully penetrate the mainstream economy.