Blockchain Association Backs Custodia's Supreme Court Petition

In its friend-of-the-court brief, the Blockchain Association contends the Tenth Circuit's approach gives the Fed unprecedented power that could undermine the dual banking system, under which states charter institutions alongside federal authorities. Allowing regional banks unchecked authority to deny master accounts effectively lets federal officials veto state-approved models serving lawful industries, the group argues. The association says the ruling treats a state charter as no protection at all when the federal system disagrees with the business model.

The brief points to past regulatory efforts that restricted banking access for digital asset firms. It warns the lower-court reasoning could become a template for excluding other disfavored sectors without meaningful oversight.

Master accounts are essential for settling payments efficiently, the association said. No lawful business should be shut out of core financial infrastructure through regulatory pressure or discretionary gatekeeping. Access on equal terms, the group maintains, is necessary for digital-asset companies to compete fairly.

The Fed has explored limited alternatives, such as narrower payment accounts. The brief describes these as inadequate substitutes for full master-account privileges. They leave the applicant dependent on the Fed's willingness to grant and maintain access, and they do not give a bank the same standing in the payment system.

The case extends beyond Custodia. A Supreme Court decision could determine how state-chartered banks oriented toward innovation reach the national payments system, and how far federal agencies can go in managing perceived risks.

The Kansas City Fed has been given until mid-September to respond to the petition. After that response, the justices will decide whether to grant review. Limited-purpose arrangements, including one recently granted to another crypto-related firm, have offered narrower alternatives to a full master account.