Custodia Bank Appeals District Court Decision Denying It Fed Master Account Access

Custodia, a full reserve crypto bank from Wyoming that has been actively seeking this account for several years, has filed an appeal against a court decision confirming the Federal Reserve's refusal of its application for a master account.

Custodia Bank Appeals District Court Decision Denying It Fed Master Account Access
  • Master accounts grant institutions direct entry to the Fed's payment systems, offering the most immediate access to the U.S. money supply for financial institutions. Institutions lacking these accounts are forced to partner with banks that possess master accounts for service provision.
  • In a judgment filed in March, Judge Scott Skavdahl said Federal Reserve Banks have exclusive discretion in whether or not to grant master accounts:
"Unless Federal Reserve Banks possess discretion to deny or reject a master account application, state chartering laws would be the only layer of insulation for the U.S. financial system. And in that scenario, one can readily foresee a 'race to the bottom' among states and politicians to attract business by reducing state chartering burdens through lax legislation, allowing minimally regulated institutions to gain ready access to the central bank's balances and Federal Reserve services," ruled Judge Scott Skavdahl.
  • "If Custodia's position was correct, it would effectively mean that every depository institution chartered under the laws of a state, regardless of how soundly crafted, is entitled to a master account allowing it direct access to the federal financial system," the judge stated last month. 
  • Custodia sued the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City in 2022 for delaying a decision on its application following a statutory deadline of 12 months. Custodia's request for a master account was denied by the Fed in January 2023 based on "fundamental concerns" with Custodia's approach.

Notice of Appeal
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