Custodia’s five-year fight for a Fed master account effectively ends in 7-3 appeals court loss

Custodia Bank’s attempt to force the Federal Reserve to grant it a master account has effectively failed after the U.S. Court of Appeals for the 10th Circuit denied a rehearing en banc, voting 7-3 to uphold previous rulings. The court maintained that the Fed has the discretion to approve or deny such applications. Custodia, founded by Caitlin Long, initially applied in 2020 but was denied in 2023 due to concerns about its crypto-focused business model. A dissenting judge, Timothy Tymkovich, warned that the ruling grants unchecked power to regional Federal Reserve Banks and raises constitutional concerns. Custodia’s remaining option is a petition to the U.S. Supreme Court. This decision comes shortly after the Fed granted Kraken Financial a limited-purpose master account, signaling a potential shift in the Fed’s approach to crypto firms, with proposals for 'skinny master accounts' and the withdrawal of restrictive guidance.

(Source：The Block)