Supreme Court · Federal Reserve (FED) · Cointelegraph
Crypto group backs Custodia in Supreme Court battle over Fed access
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The Blockchain Association argues the Fed should not have broad discretion to deny eligible state-chartered banks direct access to its payment system.
Key facts
- The Federal Reserve Bank of Kansas City denied Custodia’s application in 2023, and the Tenth Circuit Court of Appeals later ruled that the regional Fed bank had discretion to reject its request
- The Blockchain Association urged the US Supreme Court to hear Custodia Bank’s challenge to the Federal Reserve’s denial of its application for a master account, which would give the crypto-focused
- In March, Kraken Financial became the first crypto banking unit to receive a limited-purpose master account from the Federal Reserve Bank of Kansas City, giving it direct access to Fedwire
- The Blockchain Association argues the Fed should not have broad discretion to deny eligible state-chartered banks direct access to its payment system
Summary
The Blockchain Association urged the US Supreme Court to hear Custodia Bank’s challenge to the Federal Reserve’s denial of its application for a master account, which would give the crypto-focused bank direct access to the Fed’s payment system. In an amicus brief filed Wednesday, the industry group argued that federal law requires the central bank to make its payment services available to eligible nonmember banks and that the Fed should not have broad discretion to deny access. The association said the appeals court’s decision effectively gives the Fed veto power over state-chartered banks by allowing it to withhold services needed to operate independently. Custodia, a Wyoming-chartered bank focused on digital assets, applied for a Fed master account in 2020, seeking direct access to the central bank’s payment services without relying on an intermediary bank.