Cryptocurrency-related firms scramble for legitimacy and infrastructure parity with traditional banks as the US progressively leans pro-crypto.
Against this backdrop, a clear regulatory hierarchy has emerged, with reports indicating that only two players are at the top.
Crypto Firms Battle for Fed Access, But Only Custodia and Kraken Are In
Custodia Bank and Kraken Financial are the only crypto-native institutions with full bank charters. This positions them as frontrunners for coveted Federal Reserve (Fed) master accounts.
Custodia Bank CEO Caitlin Long distilled the stakes in a post on X (Twitter), highlighting a deepening divide between regulatory status and real access.
“Good way to understand the buzz about crypto companies applying for OCC trust charters: ‘In terms of tiers, a master account is Diamond, bank is Platinum, trust companies are Gold & money transmitter licenses are Silver.’ Only 2 crypto companies are banks (Custodia Bank and Kraken); others are trusts or money transmitters. Most of the OCC applications making news are for trusts, not banks,” Long explained.
A master account grants institutions direct entry to the Fed’s payment system. While traditional banks take this asset for granted, crypto firms have long been denied.
The Fed is currently defending this stance in a lawsuit brought by Custodia Bank, and a decision is expected soon.
Ripple, meanwhile, is trying to climb the access ladder. Eleanor Terrett, host of Crypto America, confirmed that Ripple applied for a Fed master account through Standard Custody, a trust company it acquired in 2023.
“Being granted a Fed master account is a much bigger deal than getting granted an OCC charter in terms of access,” Terrett noted.
However, Ripple’s strategy comes with challenges. A 2024 Wyoming court ruling reaffirmed the Fed’s discretion to deny master accounts even to state-chartered banks. As BeInCrypto reported, the court cited systemic risk and regulatory arbitrage concerns.
While not definitive, that decision casts doubt on whether OCC trust charters, or even SPDI status, can guarantee Fed access.
“Challenging the Fed’s strong-arm tactics has always been an uphill battle,” a Custodia Bank spokesperson reportedly said at the time.
New Applications Signal Hope and Political Calculations in the Fed Access Fight
Still, that has not stopped a fresh wave of applications. Despite unclear eligibility under current rules, WisdomTree Digital Trust, Standard Custody, and Commercium Financial have recently applied for master accounts.
Meanwhile, there is speculation that the Trump administration could issue an executive order mandating the Fed open access to crypto firms. This explains why firms are applying now, despite the odds.
In parallel, the crypto lobby is ramping up its political influence. After spending $136 million to elect pro-crypto candidates in 2024, super PACs like Fairshake and Protect Progress are back at it in 2025.
According to Crypto America, Protect Progress recently spent $1 million to help James Walkinshaw win the Democratic primary in Virginia’s 11th District. Notably, crypto-skeptic Rep. Gerry Connolly long held the seat.
Walkinshaw’s win is being seen as a bellwether for crypto’s growing bipartisan influence in Washington, where Congress is now considering bills like the GENIUS and CLARITY Acts aimed at defining regulatory clarity for digital assets.
Despite the complex legal playing field, the signal is that the Fed’s access has become crypto’s next big battlefield.
With Kraken and Custodia the only ones holding ‘Diamond’ keys, the rest of the industry is searching for ways to climb the tiered ladder of financial legitimacy. While some leverage trust charters, others cash in on legal action and political muscle.
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