Supreme Court Sought in Crypto Banking Access Case
Custodia Bank, a Wyoming-chartered Special Purpose Depository Institution focused on digital assets, has asked the US Supreme Court to review its dispute over access to Federal Reserve payment services.
In 2020, Custodia applied for a master account with the Federal Reserve Bank of Kansas City, which allows eligible institutions to access Federal Reserve payment services directly. However, the Kansas City Fed denied the application in 2023, citing concerns about business models concentrated in crypto-related activities.
The Federal Reserve Board also denied Custodia's application to become a member of the Federal Reserve System, citing deficiencies involving risk management, compliance, information technology, and its uninsured, crypto-focused business model. A federal district court ruled against Custodia in March 2024, and a divided panel of the US Court of Appeals for the Tenth Circuit upheld that decision in October 2025.
Custodia argues that the Monetary Control Act requires the Federal Reserve to make its services available to legally eligible non-member depository institutions. The Blockchain Association has filed an amicus brief supporting Custodia's petition, arguing that the Tenth Circuit's decision grants the Federal Reserve excessive power over state-chartered banks.
The dispute raises questions about the balance between federal oversight and state banking charters as digital asset firms seek direct access to established payment infrastructure. A Supreme Court decision to hear the case could lead to clarification of how much discretion regional Federal Reserve Banks have when evaluating account requests from legally eligible state-chartered institutions.