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

A federal appeals court in Denver denied crypto bank Custodia's request for a master account with the Federal Reserve, siding with a lower court's decision. The court ruled that the Fed has discretion to deny master account requests based on perceived risks associated with a bank's business model, particularly in cryptocurrency. The Fed asserted that Custodia's focus on crypto presented undue risks to the banking system. This decision underscores that merely being eligible for an account does not guarantee access. Currently, no crypto-focused banks have been granted master accounts by the Fed. Judge David Ebel, in writing the majority opinion, emphasized the Fed's authority to safeguard the financial system, while the dissenting judge argued the Fed's obligations to provide services to eligible banks based on existing statutes. Custodia's founder expressed disappointment but noted the dissent as a hopeful sign, indicating potential for future change in Fed policies, especially with expected shifts in Fed leadership. This latest legal setback continues the ongoing struggle of crypto institutions to secure access to traditional banking infrastructure.

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