Federal Court Rejects Custodia Bank’s Master Account Request

A US federal court has rejected Custodia Bank’s final attempt to challenge the Federal Reserve’s authority over granting master accounts, effectively ending the crypto-focused bank’s five-year-long bid for direct access to the central bank’s payment system. The US Court of Appeals for the Tenth Circuit announced on Friday it would not hear Custodia’s appeal in a 7-3 vote.

Custodia first applied for a master account in October 2020; such accounts let financial institutions hold reserves at the Federal Reserve and access its payment rails to settle transactions without intermediary banks. After the Fed declined the application, Custodia argued the Monetary Control Act entitles state-chartered banks to Fed services.

Multiple courts have now ruled the Fed retains discretion over whether to grant master accounts.

United States

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