The Blockchain Association urges the Supreme Court to hear Custodia Bank’s Fed master account case, arguing the Tenth Circuit gave the central bank veto power over state-chartered crypto banks.
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The Blockchain Association wants the US Supreme Court to hear Custodia Bank’s challenge to the Federal Reserve’s denial of its master account application. In an amicus brief filed Wednesday, the industry group argued the central bank cannot broadly refuse payment-system access to eligible state-chartered banks.
The case turns on whether federal law gives the Fed discretion to deny master accounts to nonmember banks that meet the statutory criteria. Custodia, a Wyoming-chartered digital asset bank, applied for direct Fedwire access in 2020. The Federal Reserve Bank of Kansas City rejected the application in 2023. The Tenth Circuit Court of Appeals ruled the regional Fed had that authority, and in March the full circuit voted 7-3 against rehearing.
The Blockchain Association said the appeals court’s reading would let the Fed effectively veto state banking charters by withholding the payment services those banks need to operate independently. The brief linked Custodia’s case to alleged “Operation Choke Point 2.0,” arguing federal regulators have used payment-system access to discourage banks from serving crypto firms.
Custodia’s petition asks the Supreme Court to decide whether the Fed’s discretion over master accounts is bounded by statutory eligibility requirements. The association said the Tenth Circuit interpreted the Monetary Control Act too broadly.
The timing matters. Other crypto companies have been gaining more banking access. Kraken Financial in March became the first crypto banking unit to receive a limited-purpose master account from the same Kansas City Fed that rejected Custodia. Coinbase in April got conditional approval from the Office of the Comptroller of the Currency to establish a national trust company, bringing its custody business under federal oversight without retail deposit-taking. Circle received final OCC approval for its national trust bank in July. The OCC also conditionally approved applications from Ripple, BitGo, Fidelity Digital Assets and Paxos in December.
Traditional banking groups have pushed back. The Independent Community Bankers of America opposed Coinbase’s approval in April, arguing crypto companies want the benefits of bank charters without full regulatory obligations.
A Supreme Court grant of certiorari would put Custodia’s case before the justices in the October 2025 term. The association’s brief is one of several expected before the Court decides whether to hear the petition, likely in the coming months.
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