Court Denies Crypto Bank Custodia's Bid to Pry Master Account From Unwilling Fed

A federal appeals court in Denver rejected crypto bank Custodia's appeal to obtain a master account from the Federal Reserve, siding with a lower court's prior ruling. The court concluded that while Custodia is technically eligible, the Fed retains discretion to deny access based on potential risks associated with the bank's crypto-centric business model. The Kansas City branch of the Fed had previously determined that Custodia's operations posed undue risks to the U.S. banking system. This decision reflects the ongoing struggle for crypto-focused institutions to secure master accounts, which provide vital access to federal payment services. Custodia's founder indicated potential plans for a rehearing, citing a dissent by a judge who argued that relevant statutes mandate the Fed to grant access to all eligible banks. The landscape may shift soon, however, as upcoming changes in Fed leadership could result in more favorable policies towards crypto.

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