The Blockchain Association tells the Supreme Court a lower court ruling lets the Fed quietly debank digital-asset firms, backing Custodia's master account fight.
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The Blockchain Association wants the Supreme Court to hear Custodia Bank's fight with the Federal Reserve, arguing the central bank should not have unchecked power to block state-chartered banks from the payment system.
In an amicus brief filed Wednesday supporting Custodia's petition, the crypto trade group said a lower court ruling gives federal regulators a quiet way to cut lawful businesses out of banking.
"The decision ratifies the Fed's misuse of its payment services to further an impermissible policy goal–debanking the digital-asset industry," the Blockchain Association wrote.
An amicus brief is a legal filing from someone not party to a case who wants to offer the court additional arguments. Here, the association backs Custodia's request that the justices review the dispute.
At stake is Custodia's bid for a Federal Reserve "master account." The Wyoming-chartered crypto bank offers digital-asset custody, payments infrastructure, and dollar-backed stablecoin services to institutional clients. It has spent years seeking a master account, which would let it settle payments directly with the central bank.
In October, an appeals panel ruled that eligibility alone did not entitle Custodia to an account. The bank asked the full Tenth Circuit to rehear the case in December.
The Blockchain Association argues the Fed's denial threatens the dual banking system, where both state and federal authorities can charter banks. If the ruling stands, federal regulators could override state banking decisions by denying payment system access.
"Whether federal regulators, based on their own discretionary whims, can intrude on state prerogatives and debank lawful businesses is a question of exceptional importance with broad consequences for the national economy," the group wrote.
The brief called Custodia's fight the latest phase of Operation Choke Point 2.0, invoking the Obama and Biden-era program critics said pressured banks to cut ties with disfavored industries.
"In a well-documented campaign termed Operation Choke Point 2.0, the federal government under the prior administration 'used vague rules, excessive discretion, informal guidance, and aggressive enforcement actions to pressure banks away from serving digital asset clients,'" the brief said.
The Supreme Court has not agreed to hear the case. The brief asks the justices to decide how much control the Fed should have over payment system access.
For more on how regulatory pressure is reshaping crypto markets, see our crypto market analysis.
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