Custodia Loses Final Appeal on Fed Master Account as Federal Reserve Opens Limited Access for Crypto Firms

Crypto bank Custodia saw its final appeal rejected in a 7-3 vote by the U.S. Court of Appeals for the 10th Circuit on Friday, ending years of litigation over the Federal Reserve's denial of its master account application. The decision comes as the Federal Reserve Bank of Kansas City recently granted Kraken's banking arm a restricted account sharing many features with a master account, and the Federal Reserve Board is working on a national policy for "skinny" master accounts modeled on that approach. In a dissenting opinion, Judge Timothy Tymkovich argued that giving Reserve Banks unreviewable discretion over master accounts conflicts with statutes and potentially the Constitution, warning the case carries significant consequences for the financial industry and the state-federal balance in banking regulation.