Crypto Bank Custodia Suffers Another Court Rejection in Fed Master Account Pursuit

Why It Matters

The verdict confirms that the Federal Reserve can refuse master‑account requests, limiting crypto banks’ ability to tap the U.S. payment infrastructure and slowing broader adoption of digital‑asset services.

Summary

An appeals court in the 10th Circuit rejected Custodia Bank’s bid to compel the Federal Reserve to grant it a master account, upholding a lower‑court decision that the Fed has statutory discretion to deny such access. Custodia, a Wyoming‑chartered crypto‑focused depository institution founded by Caitlin Long, sued the Fed in 2022 alleging the central bank lacked authority to reject its application, but both the district court and the appellate panel found the statutes and a 2023 amendment give the Fed broad discretion. The ruling leaves Custodia without access to the Fed’s payment rails and the company may seek a rehearing. The decision underscores the legal hurdles crypto banks face in integrating with the traditional banking system.