Court denies Custodia crypto bank’s lawsuit against the U.S. Federal Reserve., 2026/03/15 15:48:18

The U.S. Court of Appeals for the Tenth Circuit has rejected the cryptocurrency bank Custodia’s request for a review of its case against the Federal Reserve System (Fed). This effectively removes the bank’s ability to appeal for a master account that would enable direct access to the country’s banking system without intermediaries.

A vote of seven judges against three resulted in the denial to reconsider the lawsuit against the Fed. Consequently, the October ruling by the panel of judges remains in effect, affirming that the Fed has the authority to independently decide on the issuance or denial of master accounts to the crypto bank.  

Judge Timothy Tymkovich expressed a dissenting opinion following the denial for a review, stating that the majority’s decision effectively grants the Fed and its regional representatives unlimited power regarding institutions’ access to the U.S. payment system. According to Tymkovich, this impacts constitutional freedoms, as such authority ultimately resides with officials not appointed in accordance with the U.S. Constitution. 

“Without an account at the Fed, a bank cannot operate within the modern banking system. The refusal to provide an account is essentially equivalent to revoking the bank’s state license, undermining the existing banking system in the country,” the judge noted in his dissenting opinion. 

Custodia filed its initial lawsuit in June 2022. Initially, the claims centered on a 19-month delay in processing the application for a correspondent account with the Fed. After the central bank’s denial, Custodia prepared a new lawsuit, arguing that the Monetary Control Act grants any eligible financial institution the right to a master account, and that the refusal was unjustified. Custodia is currently considering the possibility of appealing the case to the U.S. Supreme Court, intending to present Tymkovich’s dissenting opinion as one of its arguments.  

Custodia is a specialized depository institution registered in the state of Wyoming. The bank first applied for a correspondent account in October 2020. In early 2021, the regional Fed branch that received the application confirmed that there were “no critical issues,” but in January 2023, it ultimately denied the bank. The reason cited was concerns related to the bank’s cryptocurrency-focused business model. 

Custodia’s defeat in court occurred just days after the Fed opened an account for the cryptocurrency exchange Kraken, marking the first such instance for a cryptocurrency company.