Blockchain Association Backs Custodia’s Supreme Court Bid for Fed Access
A Federal Reserve master account gives a bank direct access to payment and settlement rails including Fedwire, FedNow and automated clearing house services. Without one, a lender such as Wyoming-chartered digital-asset bank Custodia must rely on correspondent banks, adding cost, counterparty exposure and settlement risk. Custodia argues the Monetary Control Act of 1980 requires covered Fed services to be available to eligible nonmember depository institutions. The dispute could shape the US dual-banking system and state-chartered firms’ ability to compete with federally supervised banks.
Custodia petitioned the US Supreme Court on July 10, 2026, after the Tenth Circuit upheld regional Federal Reserve banks’ discretion to reject master-account applications; the appeals court denied rehearing on March 13. The Blockchain Association filed an amicus brief on August 12 urging the justices to hear the case, arguing the ruling gives the Fed an effective veto over state-chartered banks. It also said the Fed’s proposed Payment Accounts are inadequate because they exclude FedACH, pay no interest and cap closing balances at $1 billion. The Fed’s response is due September 11.
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The history behind this eventDigital-Asset Bank Custodia Petitions U.S. Supreme Court
Digital-asset bank Custodia applied to the Federal Reserve for a master account in October 2020, seeking direct access to the U.S. dollar payment system without relying on intermediaries. The Fed rejected the application, citing the high risks posed by the bank’s business model. At issue is whether the Fed has authority, immune from judicial review, to approve or deny accounts for state-chartered banks—a question with direct implications for the future of the cryptocurrency industry and emerging digital banks.
After losing several rounds in court, Custodia formally petitioned the U.S. Supreme Court in July 2026 to challenge a March ruling by the U.S. Court of Appeals for the Tenth Circuit. The appeals court voted 7–3 to uphold the Fed’s denial. The Supreme Court is expected to decide in October 2026 whether to hear the case, which has become a landmark clash between traditional finance and the crypto industry.
Custodia Loses Fed Master Account Challenge as Kraken Wins Limited Access
A master account allows a financial institution to use Federal Reserve payment rails such as Fedwire directly, without going through a correspondent bank, affecting settlement costs and liquidity. Wyoming-chartered digital asset bank Custodia applied in October 2020 and sued in June 2022. The Federal Reserve Bank of Kansas City rejected its application in 2023, prompting a dispute over whether a regional Fed bank could decide independently whether to approve or deny access.
On March 13, 2026, the U.S. Court of Appeals for the Tenth Circuit voted 7–3 to deny an en banc rehearing, ending Custodia’s main avenue of appeal after a nearly five-year fight and preserving the Federal Reserve’s ultimate discretion. By contrast, the Kansas City Fed approved a limited, one-year account for Kraken Financial on March 4. The account pays no interest and does not permit overdrafts, while the Federal Reserve is considering a uniform nationwide policy.
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