Custodia Appeals Fed Master Account Denial With En Banc Petition
Custodia Bank, a Wyoming-chartered, crypto-focused bank founded by Caitlin Long, is intensifying its legal battle to obtain a Federal Reserve master account by filing a petition for a rehearing en banc with the Tenth Circuit Court of Appeals. Custodia argues that the court misinterpreted the Monetary Control Act by upholding the Fed’s denial of its master account, which it claims undermines state authority and raises constitutional questions about the Fed’s structure. A Fed master account allows financial institutions to directly hold balances with the central bank and access its payment systems, which is essential for banks like Custodia to settle payments efficiently without intermediaries. Without a master account, Custodia must rely on correspondent banks, resulting in increased costs, risks, and delays. Despite repeated attempts since its 2020 launch, Custodia's application for a master account and Federal Reserve membership has been denied. This struggle highlights broader ongoing issues of crypto sector “debanking” and regulatory obstacles in the U.S. banking system.
