Custodia Bank Loses Case For Rehearing Over Fed Master Account – Details

Crypto bank Custodia has lost another legal battle in its campaign to review the Federal Reserve’s position as the final authority over granting master accounts. This development comes after the US Court of Appeals for the Tenth Circuit rejected the Caitlin Long-led digital bank’s request for rehearing after an initial favorable ruling for the Federal Reserve in October 2025.

In 2023, the Federal Reserve Bank of Kansas City (FRBKC) rejected Custodia’s application for a master account, a designation that would have granted the crypto bank access to the Fed’s payment rails, thus eliminating the need for intermediary services. Notably, Custodia challenged this decision at a Wyoming district court in 2024, claiming its eligibility for a master account as a nonmember depository institution, while also stating the FRBKC lacked the constitutional authority to deny its application, having satisfied the requirements. 

Further details indicate that the judgment was reached by a 7-3 vote, with the majority of the panel agreeing that the Federal Reserve holds final authority over such account-designation matters.  Notably, dissenting judges Timothy Tymkovich and Allison Eid warned that granting Federal Reserve banks unchecked authority to accept or deny applications from state-chartered institutions contravened the Monetary Control Act of 1980.

At the time of writing, Custodia has yet to issue any official reaction to the Appellate Court’s recent ruling.