(Westlaw) A federal appeals court has affirmed the Federal Reserve’s discretion to deny a master account to a Wyoming-chartered crypto bank that had argued federal law mandates access to the nation’s central banking system.
Custodia Bank Inc. v. Federal Reserve Board of Governors et al., No. 24-8024, 2025 WL 3039669 (10th Cir. Oct. 31, 2025).
A 2-1 panel of the 10th U.S. Circuit Court of Appeals on Oct. 31 ruled that while Custodia Bank Inc. was eligible for a master account, the Federal Reserve Bank of Kansas City was not statutorily required to grant one.
Writing for the majority, U.S. Circuit Judge David M. Ebel said the discretionary language of the Federal Reserve Act of 1913, 12 U.S.C.A. a7 342, controls.
He said Congress did not override that discretion when it passed the Monetary Control Act of 1980, 12 U.S.C.A. a7 248a, to make Fed services more widely available.
A ‘bank account for banks’
According to the opinion, Custodia is a special purpose depository institution, or SPDI, a novel bank charter Wyoming created in 2019 to serve digital asset companies. SPDIs are generally prohibited from making loans and must maintain 100% reserves for their deposits.
Custodia applied for a master account with the Kansas City Fed in October 2020, the opinion says. A master account is a “bank account for banks” that allows direct access to the Federal Reserve’s payment systems, including wire transfers and settlement services. Without it, a bank must partner with an intermediary correspondent bank, according to the opinion.
In denying the application in January 2023, the Kansas City Fed said Custodia’s “novel and unprecedented” crypto-focused business model presented “heightened risks” that were “inconsistent with safe and sound banking practices,” the opinion says.
Custodia sued the Kansas City Fed and the Federal Reserve Board of Governors in the U.S. District Court for the District of Wyoming in June 2022.
U.S. District Judge Scott W. Skavdahl granted summary judgment to the Fed, concluding that the relevant statutes give reserve banks discretion. Custodia Bank Inc. v. Fed. Reserve Bd. of Governors, 728 F. Supp. 3d 1227 (D. Wyo. 2024).
Custodia appealed.