After Setbacks, Crypto Bank Custodia Keeps Fight Alive to Gain Fed Master Account
Custodia, a crypto bank operating under Wyoming’s special purpose depository institution (SPDI) charter, lost a key court battle to compel the Federal Reserve to grant it a master account, which is essential for direct access to the Fed’s payment system and national banking operations. Following a 2-1 decision against it by a three-judge panel of the U.S. Court of Appeals for the 10th Circuit, Custodia has requested a rare “en banc” review, where all 19 judges reconsider the case due to what it claims are issues of national importance and states’ rights. Custodia argues the denial undermines state banking authority and raises constitutional questions about the power of mid-level Federal Reserve officials. Historically, the Fed has never granted a master account to a crypto-focused bank, and a denial essentially forces affected banks to cease national operations. The court majority maintained the Fed’s legal discretion to deny master accounts for institutions posing potential threats to the financial system’s stability. The odds of Custodia receiving the sought-after en banc rehearing are considered extremely low.
