Blockchain Association Supports Custodia Bank’s Supreme Court Challenge To Fed Master Account Denial

The Blockchain Association has stepped forward to support Custodia Bank in its bid for US Supreme Court review of a long-running dispute with the Federal Reserve over access to a master account.

In an amicus brief filed this week, the crypto industry group urges the justices to examine whether regional Federal Reserve banks hold broad discretion to reject applications from eligible, state-chartered institutions.

Custodia, a Wyoming-chartered special-purpose depository institution founded by Caitlin Long and focused on serving digital-asset clients, first sought a master account from the Federal Reserve Bank of Kansas City in October 2020.

Such an account provides direct entry to the central bank’s payment systems, including Fedwire and related settlement services, which are essential infrastructure for modern banking.

Without one, institutions must rely on correspondent banks, adding costs, delays, counterparty risks, and the threat that a intermediary could terminate the relationship.

The Kansas City Fed denied the application in January 2023, pointing to risks tied to Custodia’s crypto-oriented business model.

Custodia sued, arguing that the Monetary Control Act of 1980 requires the Fed to make its services available to eligible nonmember depository institutions.

Lower courts disagreed. A district court ruled against the bank in 2024.

A divided Tenth Circuit panel affirmed in late 2025, holding that regional Reserve Banks retain discretion to approve or deny master accounts.

The full appeals court then declined en banc rehearing by a 7-3 vote in March 2026.

Custodia petitioned the Supreme Court last month, asking it to clarify the scope of that statutory language and the limits of administrative discretion.

In its friend-of-the-court brief, the Blockchain Association contends the Tenth Circuit’s approach grants the Fed unprecedented power that could undermine the dual banking system, in which states traditionally charter institutions alongside federal authorities.

The group argues that allowing regional banks unchecked authority to deny master accounts effectively lets federal officials veto state-approved models serving lawful industries.

It points to past regulatory efforts that restricted banking access for digital asset firms and warns that the lower-court reasoning could serve as a template for excluding other disfavored sectors without meaningful oversight.

The association stresses that master accounts are vital for settling payments efficiently and that no lawful business should be shut out of core financial infrastructure through regulatory pressure or discretionary gatekeeping. Access on equal terms, it maintains, is necessary for digital-asset companies to compete fairly.

While the Fed has explored limited alternatives, such as narrower payment accounts, the brief describes these as inadequate substitutes for full master-account privileges.

The case carries implications beyond one institution.

A Supreme Court decision could shape how state-chartered banks focused on innovation access the national payments system and how far federal agencies may go in managing perceived risks.

The Kansas City Fed has been given until mid-September to respond to the petition.

Meanwhile, limited-purpose arrangements, such as one recently granted to another crypto-related firm, illustrate that some pathways exist but remain constrained.

By supporting Custodia’s petition, the Blockchain Association seeks to ensure that essential banking services remain available based on legal eligibility rather than policy preferences, preserving competitive balance and state regulatory roles in the financial system.