#SARAH BLOOM RASKIN BITCOIN SERIES#
When QED led Reserve Trust’s Series A round in 2021, Gerety boasted that its relationship to the Fed was a big attraction. One of QED’s partners, Amias Gerety, worked for Sarah Raskin at Treasury.
One of the company’s founders, Dennis Gingold, told Bloomberg that he and other board members had sold their shares to one of the company’s largest investors, QED Investors. However, the Fed master account was prominently referenced on Reserve Trust’s Web site as recently as June 10 it has since disappeared and the site is now a single page with little information on it. FIN reached out to the company for confirmation, and received no reply. This week, Toomey revealed that the Kansas City Fed has now revoked Reserve Trust’s master account. (Raskin has explained that his son committed suicide around the time the form should have been filed, but that doesn’t account for the failure to disclose her work for the company in the previous years.) All of this was a factor in Sarah Raskin withdrawing her nomination earlier this year.īut the story doesn’t end there.
This created a headache for her husband, Representative Jamie Raskin (D-MD), because he didn’t disclose anything about her company role until eight months after the sale, a violation of Congressional rules. Raskin left Reserve Trust in 2019, and in late 2020 sold her stock in the company for $1.5 million. It may not matter much, because it seems like the Fed has a fair amount of discretion in who it gives master accounts to, but as long as we’re keeping score: a) Reserve Trust to this day describes itself as a “non-depository, Colorado chartered trust,” and b) the Colorado banking regulator labeled the Fed statement a “misrepresentation.” The Kansas City Fed, finding itself under Congressional fire, issued a statement saying that Reserve Trust “changed its business model and the Colorado Division of Banking reinterpreted the state’s law in a manner that meant met the definition of a depository institution.” The next year, the Kansas City Fed reversed its decision and granted Reserve Trust a master account-the first and apparently only nonbank to acquire that status.Īll this surfaced earlier this year, when Raskin was nominated to be the Federal Reserve’s banks regulator. According to Toomey, Raskin called Kansas City Fed President Esther George shortly after Reserve Trust’s application was rejected. Raskin began teaching at the University of Maryland, but also joined the board of Reserve Trust and received equity as compensation. When Donald Trump took office, Sarah Bloom Raskin stepped down from her position as Deputy Treasury Secretary (at the time she was the highest-ranking woman in Treasury’s history, and she had previously served as a governor of the Federal Reserve Board). Unsurprisingly, the Kansas City Fed rejected Reserve Trust’s application in mid-2017.Īround that time, some politically interesting things happened.
Reserve Trust is a state-chartered trust master accounts are typically meant for federally recognized banks, savings and loan associations, and similar institutions that handle deposits. Very few fintech startups bother to make such applications, because it’s pretty obvious they don’t qualify. Let’s start at the beginning: Reserve Trust was founded in 2016, and very quickly applied to the Federal Reserve Bank of Kansas City for a “master account,” meaning that the company would have direct access to the Federal Reserve’s payment system, and can settle transactions with other member banks using the Fed’s money. Toomey has been raising questions about Reserve Trust at least as far back as February, and to date the answers have been less than illuminating, even if the stakes are lower than Toomey’s hyperventilation suggests. This crusade is a little surprising because Toomey, who is the ranking member of the Senate banking committee and is not running for re-election this fall, usually positions himself as a friend of financial innovation.īut, you see, the company in question-Reserve Trust, which has been neatly labeled “the Stripe for B2B payments” -has important ties to prominent Democrats. Americans who are concerned that a tiny, Colorado-based fintech company may have unduly received a government favor can sleep at night, knowing that Senator Pat Toomey (R-PA) is taking on the issue with bulldog tenacity.
Nothing encourages Congressional regulatory scrutiny as much as a good partisan scrape.
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