Supreme Court Petition Seeks Clarity on Fed Discretion Over Master Accounts

The Blockchain Association has filed an amicus brief in support of Custodia Bank's petition to the Supreme Court, urging the court to clarify whether regional Federal Reserve banks can deny master accounts to state-chartered institutions that meet all statutory requirements. The case stems from Custodia's application for a master account with the Federal Reserve Bank of Kansas City in October 2020, which was rejected in January 2023 due to concerns tied to its crypto-focused business model.

Custodia has argued that regional Fed banks retain discretionary authority over master account approvals, despite statutory criteria being met. The Blockchain Association's brief contends that this creates a dangerous precedent and could allow entire lawful industries to be cut off from the nation's payment rails through administrative discretion rather than legislative action.

The Supreme Court has yet to indicate whether it will grant certiorari in the case, but if it does, a decision is potentially expected by mid-2027. The implications of the ruling extend beyond Custodia and Wyoming-chartered institutions, affecting every state-chartered institution seeking direct payment system access.