Custodia Bank to Take Fed Master Account Dispute to US Supreme Court

Custodia Bank, a bank focused on digital assets, is moving to take its dispute with the Federal Reserve over a master account to the US Supreme Court.

Eleanor Terrett, host of CryptoAmerica, wrote on X on May 29 that US Supreme Court Justice Neil Gorsuch had granted Custodia additional time to file a certiorari petition.

Custodia plans to ask the Supreme Court to decide whether the Fed has legal discretion to deny its application for a master account. The filing deadline is July 11.

A master account allows a bank to access the Federal Reserve's payment system directly. It is considered critical infrastructure for financial institutions because it provides access to the central bank's settlement network.

Custodia is a Wyoming-chartered bank specializing in digital assets. It applied for a master account in 2020, but the Federal Reserve Bank of Kansas City denied the request in 2023, setting off the legal fight.

Custodia has since sued the Fed, arguing that eligible depository institutions should be granted access to a master account. The Fed has maintained that it has discretion over whether to grant one.

US courts have so far sided with the Fed. After a federal court in Wyoming ruled for the central bank, the US Court of Appeals for the Tenth Circuit also found that the Fed has discretion to decide whether to issue a master account. Custodia's subsequent request for an en banc rehearing was also denied.

Once the certiorari petition is filed, the Supreme Court will decide whether to hear the case. If the justices take it up, the long-running legal dispute between Custodia and the Fed will enter a new phase.