The Federal Reserve is tightening its grip on innovation, going beyond cryptocurrencies, as revealed by Custodia Bank CEO Caitlin Long in an interview with FOX Business reporter Eleanor Terrett. The interview focused on the recent court case involving Custodia Bank and the Federal Reserve, which has implications for the broader tech ecosystem in the country.

Custodia Bank, a crypto-friendly bank, applied for supervision by the Federal Reserve, seeking access to a Master Account through the Kansas City Fed. However, the Federal Reserve denied the bank's request, citing legal requirements that Custodia Bank did not meet. This led to a lawsuit, with many in the crypto industry, including pro-XRP lawyer John E. Deaton, expecting a victory for the bank.

Despite the anticipation, the court ruled in favor of the Federal Reserve, denying Custodia Bank's request for a declaratory judgment. While Long acknowledged that court cases can go either way, she hinted at a possible appeal, stating that the final law might be made at the Appellate Court.

The Federal Reserve's decision has broader implications for the tech industry, as Long identified the political bias of the agency, which is stiffening innovations beyond just crypto. The court's decision has been perceived as a political ploy by lawmakers like Senator Elizabeth Warren, who is fighting against digital currency innovation.

Custodia Bank's move to integrate traditional finance with decentralized finance is one of the innovations facing obstacles in the financial sector. Many firms have faced regulatory challenges, which they perceive as a political ploy to hinder innovation.

However, there is hope for change, as pro-crypto attorney John Deaton, who is running against Sen Warren for a Massachusetts seat at the Capitol, is rallying support from crypto innovators. Should Deaton succeed, expectations are high that changes might come to the crypto regulatory landscape in the country.