TheBlock
Custodia Bank's long-running fight for a Federal Reserve master account reached the Supreme Court this week, with the Blockchain Association filing an amicus brief in support of the Wyoming-chartered crypto bank's petition. The industry group urged the justices to review whether regional Fed banks have the discretion to reject master-account applications from state-approved eligible institutions, framing the dispute as a structural question about administrative power over digital-asset banking.
Why it matters
A Fed master account would give Custodia direct access to the central bank's payment rails, the same high-value dollar settlement infrastructure commercial banks rely on. The Kansas City Fed denied Custodia's application in January 2023, citing concerns about the bank's crypto-focused business model, and Custodia has now lost at every level below. A district court ruled against it in 2024, the 10th Circuit followed in 2025, and the full appeals court denied rehearing by a 7-3 vote in March 2026.
The Blockchain Association warned in its brief that prior lower-court rulings risk giving federal regulators "a blueprint to debank disfavored industries or companies in the future without interference from state regulators." No lawful industry should be excluded from essential banking services through regulatory pressure or unchecked administrative discretion, the group wrote on X.
Market impact
The high court has not yet indicated whether it will hear the case. The Kansas City Fed is due to respond to Custodia's petition by September 11. If SCOTUS takes it up, the justices will test whether the Monetary Control Act binds regional Feds or leaves denial authority discretionary.
The stakes are concrete. In March 2026 the same Kansas City Fed granted Kraken Financial a limited-purpose master account, the first crypto-native firm to land one. Kraken's arrangement includes no access to interest on reserves, a hint at how narrow any future Custodia win could be, but also proof that the Fed has, in at least one case, decided crypto banking is bankable.
Frequently asked questions
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What is Custodia Bank asking the Supreme Court to decide?
Custodia wants the court to review whether regional Federal Reserve banks have the discretion to deny master-account applications from state-approved eligible institutions, or whether the Monetary Control Act requires them to grant access.
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Why did the Kansas City Fed deny Custodia's master account application?
The Kansas City Fed denied Custodia's application in January 2023, citing concerns about the bank's crypto-focused business model.
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What would a Fed master account give Custodia access to?
A master account would give Custodia direct access to the Federal Reserve's payment rails, the same high-value dollar settlement infrastructure used by commercial banks.
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How has Custodia's case fared in the lower courts?
Custodia lost at the district court level in 2024 and at the 10th Circuit in 2025. The full 10th Circuit then denied rehearing by a 7-3 vote in March 2026 before Custodia petitioned the Supreme Court.
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Has any crypto-native firm actually won a Fed master account?
Yes. In March 2026 the Kansas City Fed granted Kraken Financial a limited-purpose master account, the first crypto-native firm to receive one, though the arrangement excludes access to interest on reserves.
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