Definition
The Wyoming Special Purpose Depository Institution (SPDI, pronounced “speedy”) is a novel bank charter category created by the Wyoming legislature in 2019 (Wyoming Statutes §§ 13-12-101 through 13-12-127) specifically designed to enable companies to provide custodial services for digital assets without the requirements of a full commercial banking charter. An SPDI is authorized to accept demand deposits, provide payment and remittance services, and hold digital assets — including cryptocurrency, tokenized securities, and other blockchain-based instruments — in custody for customers. Unlike traditional fractional reserve banks, an SPDI is prohibited from making loans and must maintain 100% reserves against all deposit liabilities, meaning every dollar of customer deposits is backed by a dollar of liquid assets held by the SPDI at all times.
The 100% reserve requirement is both the SPDI’s defining characteristic and the source of its regulatory distinctiveness. Because an SPDI cannot create money through lending — the core function of fractional reserve banking — it does not require FDIC deposit insurance, which exists to protect depositors in the event of bank insolvency from loan losses. This means SPDIs are exempt from the FDIC deposit insurance requirement, which in turn means they are not subject to Federal Reserve membership as a condition of deposit-taking. The Wyoming Division of Banking oversees SPDI chartering and examination, with the Federal Reserve retaining oversight of payment system access. SPDIs may apply for Federal Reserve master accounts to access the payments infrastructure, though the Federal Reserve’s treatment of SPDI master account applications has been contentious and subject to litigation.
Key Facts
- Custodia Bank (formerly Avanti Financial Group, founded by Caitlin Long) was the first SPDI applicant and received its SPDI charter from Wyoming in October 2020, after a lengthy application process.
- Custodia Bank’s application for a Federal Reserve master account was denied in January 2023, with the Federal Reserve citing safety and soundness concerns and a lack of supervisory framework for novel-charter institutions — a decision Custodia is challenging in federal court.
- Wyoming’s SPDI law was part of a comprehensive 2019 legislative package that also addressed DAO LLCs, blockchain data management, and digital asset property rights, making Wyoming the most blockchain-friendly US state by legislative depth.
- An SPDI must maintain Wyoming-chartered business office, maintain minimum paid-in capital of $5 million or more (as specified by the Division of Banking), and undergo regular examination by Wyoming bank examiners.
- Under Wyoming law, digital assets held in custody by an SPDI are treated as customer property, not bank property — meaning they are not part of the SPDI’s bankruptcy estate if the institution fails.
- Custodia Bank’s legal fight over master account access has significant implications for all non-traditional bank charters, including crypto-friendly state charters, and whether the Fed can discriminate against state-chartered institutions.
- The SPDI model has been studied by other states considering similar legislation, including Nebraska (enacted a Digital Asset Depository charter in 2021) and Georgia.
Relevance to Tokenization
The Wyoming SPDI represents the most purpose-built state regulatory solution to the tokenized asset custody challenge in the United States. Traditional bank custodians were effectively excluded from digital asset custody by a combination of SAB 121 accounting burdens, Federal Reserve guidance restricting crypto activities, and OCC limitations on national bank crypto activities. The SPDI was designed from scratch to enable entities that want to focus specifically on digital asset custody — not lending, not complex banking services — to do so within a regulated state banking framework, with clear legal treatment of custodied digital assets as customer property.
For tokenization specifically, the SPDI structure offers several advantages over crypto-native custodians operating under state trust charters or money transmitter licenses. First, the explicit statutory designation of custodied assets as customer property provides the clearest possible legal treatment in insolvency — a critical consideration for institutional investors holding tokenized securities worth billions of dollars. Second, the banking charter confers a level of regulatory credibility that non-bank custodians lack in the eyes of pension fund investment committees, insurance regulators, and other gatekeepers who control institutional asset allocation. Third, the 100% reserve model eliminates the leverage-related insolvency risk that made the failures of FTX and Celsius so devastating to crypto custody trust.
The unresolved question of Federal Reserve master account access limits the SPDI model’s utility as a payment infrastructure provider for tokenized securities settlement. True atomic delivery-versus-payment settlement requires a common payment system — ideally central bank money accessible via Fed master accounts. Until SPDI entities can reliably access Fed payment infrastructure, their role in tokenized securities settlement will remain indirect, relying on correspondent banking relationships with master account holders. The outcome of Custodia Bank’s litigation against the Federal Reserve will determine whether the SPDI becomes a viable backbone for tokenized securities infrastructure or remains a niche state-level experiment.
Related entries: Wyoming DAO LLC, Qualified Custodian, SAB 121