Blockchain Group Urges Supreme Court to Settle Fed Discretion on Master Accounts

The Blockchain Association has filed an amicus brief urging the US Supreme Court to review Custodia Bank's challenge to the Federal Reserve's denial of a master account. The Fed rejected Custodia's application in 2023, and the Tenth Circuit Court of Appeals later ruled that regional Fed banks have broad discretion to deny such requests.

Custodia is a Wyoming-chartered special purpose depository institution that applied for a master account in 2020. A master account would allow Custodia to settle payments directly with the central bank, access Fedwire, and potentially earn interest on reserves held at the Fed.

The Blockchain Association's brief argues that federal law requires the Fed to make its payment services available to eligible nonmember depository institutions and that regional Reserve Banks should not have broad discretion to refuse. The association is seeking a Supreme Court ruling that would clarify the boundary of Fed discretion under the Monetary Control Act for any eligible institution, crypto or not.

The case highlights a broader shift in the industry, as several crypto firms have secured conditional trust or banking approvals without needing a master account specifically. A Supreme Court ruling that narrows the Fed's discretion could make it easier for future firms to access the payment system.