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

A federal appeals court in Denver has upheld the Federal Reserve's decision to deny crypto bank Custodia a master account, siding with a prior ruling. The court concluded that the Fed has the discretion to reject master account requests based on the risks associated with a bank's business model, particularly in the case of crypto-focused operations. Custodia, although deemed eligible for a master account, argued that the Fed must grant access as mandated by law. The ruling emphasized that no crypto banks have been awarded these accounts, which are essential for enabling national operations and direct access to the Fed's services. Custodia plans to potentially seek a rehearing, citing a split in judicial opinion with a dissenting judge arguing that the Fed is obligated to provide access to eligible banks. The future of master accounts for crypto banks may shift depending on changes in Fed leadership, particularly as current Fed chair Jerome Powell's term concludes soon, and new leadership may be more favorable toward crypto.

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