A US appeals court has rejected crypto-focused Custodia Bank’s request to reopen its legal fight with the Federal Reserve over access to the US banking system.
On March 13, the Tenth Circuit Court of Appeals voted 7–3 against rehearing the case. That means an earlier October ruling remains in place. The court had previously decided that Federal Reserve banks can choose whether to give an institution access to a key banking account.
Those accounts are known as “master accounts.” They allow banks to connect directly to the Federal Reserve’s payment system. Without one, a bank must rely on another bank to move money through the system.
Bad Day For Crypto Banking in the US?
Custodia, a Wyoming-chartered digital asset bank, has tried to obtain such an account since 2020. The bank says direct access would allow it to offer payment services for crypto firms without using traditional banks.
However, the Federal Reserve denied the request in 2023. Regulators said Custodia’s business model—focused on crypto assets—raised safety and financial stability concerns.
Custodia then sued the Fed, arguing that US law requires the central bank to give access to legally chartered banks. But courts have repeatedly sided with the Fed.
Friday’s decision keeps that position intact. The appeals court panel said the Federal Reserve still has discretion to approve or deny applications.
Not all judges agreed. In a dissent, Judges Timothy Tymkovich and Allison Eid warned that the ruling gives Reserve Banks too much unchecked power to block state-chartered banks.
For now, the decision is a setback for Custodia and other crypto-focused banks seeking direct access to the US financial system.
