Custodia Bank, a crypto‑focused depository institution, has filed a reply brief asking the U.S. Supreme Court to review a decision by the 10th U.S. Circuit Court of Appeals. The appellate ruling upheld the Federal Reserve System’s discretion to deny master accounts to institutions that are otherwise eligible under the Monetary Control Act of 1980.
Supreme Court petition
In the brief, Custodia argues that the appellate decision improperly allows regional Federal Reserve bank presidents, who are not appointed by the President, to block “disfavored” banking institutions from accessing core payment rails. The bank describes the potential impact of the decision as “profound,” noting that it could affect the nation’s dual banking system and limit state‑level financial innovation.
Statutory dispute
The dispute centers on the interpretation of the Monetary Control Act. Custodia contends that the statute requires the Federal Reserve to make payment services available to any eligible depository institution, leaving no room for regional banks to reject applications on policy grounds. The Federal Reserve, in contrast, argues that the statute’s language applies only to institutions “as a class,” not to every individual applicant.
Legal history
Custodia first sued the Federal Reserve Bank of Kansas City in 2022, alleging undue delay in processing its master account application. After the Fed formally rejected the application in early 2023, citing concerns about the bank’s cryptocurrency risk management, a Wyoming federal judge ruled in favor of the Fed. The 10th Circuit affirmed that ruling, though the panel was split. Circuit Judge Timothy M. Tymkovich dissented, warning that the majority decision grants the Fed “unreviewable discretion” to deny master accounts.
Support and amicus briefs
Since filing its petition for a writ of certiorari, Custodia has received backing from lawmakers, including former Senator Pat Toomey and Senator Cynthia Lummis, who filed an amicus brief arguing that the 10th Circuit misinterpreted congressional mandates.
