Custodia Bank to Petition Supreme Court
Custodia Bank, a Wyoming-chartered special purpose depository institution (SPDI), is set to petition the U.S. Supreme Court in its pursuit of a Federal Reserve master account. This follows the 10th Circuit Court of Appeals' rejection of Custodia's request for an en banc rehearing, decided by a 7–3 vote. The rejection upholds an earlier panel ruling affirming the Federal Reserve’s discretion in granting master account access.
The Role of a Master Account for Digital Asset Banks
A Federal Reserve master account provides direct access to payment rails, allowing financial institutions to settle transactions without intermediaries. For a state-chartered institution like Custodia Bank, which aims to bridge traditional banking with digital assets, this access streamlines operations, reduces counterparty risk, and integrates the institution directly into the U.S. financial infrastructure.
Custodia's Legal Journey and Supreme Court Path
Custodia Bank initiated its legal challenge after its application for a master account with the Federal Reserve Bank of Kansas City faced what it considered an unlawful delay. Custodia argued that as a state-chartered SPDI, it was legally entitled to an account, and the Fed's inaction constituted a denial without due process. The case advanced to the 10th Circuit Court of Appeals, where an October panel ruling affirmed Federal Reserve Banks' discretion to deny master account access, even to otherwise eligible institutions. Following this adverse ruling, Custodia sought an en banc rehearing by the full 10th Circuit. The 10th Circuit rejected this request, allowing the October panel’s decision to stand. With its circuit court avenues exhausted, Custodia's next procedural step is to petition the U.S. Supreme Court for a writ of certiorari, requesting a review of the 10th Circuit’s decision.