Custodia Bank Loses Federal Reserve Master Account Bid as Tenth Circuit Denies Rehearing

The U.S. Court of Appeals for the Tenth Circuit on March 13 denied Custodia Bank's request for a full court rehearing, ending the Wyoming-chartered bank's legal challenge over access to a Federal Reserve master account. The decision upholds an October ruling that regional Federal Reserve banks retain discretion in granting master accounts, which allow direct access to Fed payment systems without intermediary banks. Custodia, which focuses on digital asset services, applied for a master account in 2020 but was rejected in 2023 over concerns about its crypto-focused business model. In a dissent, Judge Timothy Tymkovich, joined by Judge Allison Eid, warned the ruling grants Reserve Banks potentially unreviewable discretion that conflicts with the Monetary Control Act of 1980 and raises constitutional issues.