U.S. Court Rejects Custodia Bank’s Bid for Federal Reserve Master Account

A federal appeals court has delivered a decisive blow to Custodia Bank's five-year quest for a Federal Reserve master account. The Tenth Circuit Court upheld the Fed's authority to deny the crypto-focused institution direct access to the U.S. payment system, marking a significant setback for digital asset banking integration.

The ruling affirms the Federal Reserve's discretionary power over payment system access, with judges noting that while the case involves cryptocurrency, the fundamental legal principles date back to the central bank's founding. Custodia Bank, founded by Wall Street veteran Caitlin Long, sought to bridge digital assets with traditional finance through this critical banking gateway.

This decision maintains the status quo of crypto's limited access to Core banking infrastructure, potentially slowing institutional adoption. The court's unanimous opinion underscores the regulatory challenges facing crypto-native financial institutions seeking full banking privileges in the current financial system.