Custodia Asks Supreme Court to Review Federal Reserve Master Account Ruling | TokenPost
Custodia Bank has petitioned the U.S. Supreme Court to review a ruling concerning access to payment accounts at the Federal Reserve. This case centers on the question of whether nonmember banks that meet certain eligibility criteria can be denied direct access to Federal Reserve services.
On October 28, Custodia submitted a reply brief in the case titled Custodia Bank, Inc. v. Federal Reserve Board of Governors, listed under docket number 26-62. The bank initially filed its petition for review on July 10. The Supreme Court has scheduled a conference for November 13 to evaluate this petition, though the justices have yet to decide whether to take on the case.
Custodia contends that the Monetary Control Act of 1980 mandates that Federal Reserve services be made accessible to eligible banks that are not part of the Federal Reserve System. In contrast, the Federal Reserve Board and the Federal Reserve Bank of Kansas City argue that the Federal Reserve Act provides regional Reserve Banks with the authority to determine whether they will accept deposits. They have urged the Supreme Court to reject Custodia's request for review.
There is also a disagreement regarding the interpretation of the appeals court's decision. Custodia views the ruling as granting Reserve Banks significant discretion without adequate limitations. Conversely, federal representatives assert that the appeals panel acknowledged some level of discretion but did not specify its extent or clarify if courts have the authority to review denials of account applications.
A master account is an account held by a financial institution at one of the Federal Reserve's twelve regional banks. This account allows the institution direct access to Federal Reserve payment services, which include wire transfers, check clearing, and settlement processes. Without a master account, a financial institution can only access payment services through another bank or a private provider.
Custodia submitted an application for a master account at the Kansas City Fed in October 2020. However, the application was denied in January 2023, with the Federal Reserve citing concerns related to Custodia's business model, which focuses on cryptocurrency. It is important to note that a separate decision by the Federal Reserve Board regarding Custodia's application to join the Federal Reserve System is not included in this particular case.
On October 31, 2025, the U.S. Court of Appeals for the 10th Circuit upheld the lower court's decision favoring the Federal Reserve. Judge Timothy M. Tymkovich dissented, arguing that the 1980 law mandates access for eligible nonmember institutions. The full appeals court subsequently denied a request for rehearing on March 13, 2026. The upcoming conference on November 13 at the Supreme Court represents the next significant milestone in this ongoing legal battle.