Blockchain Association asks US Supreme Court to review Fed’s denial of Custodia Bank master account

The Blockchain Association wants the Supreme Court to take Custodia Bank’s case, arguing that the Federal Reserve should not be able to shut a legally eligible digital asset bank out of its payment system. For high-risk operators, the point is simple: if the Fed’s discretion stands this far, access to core banking rails can hinge on policy judgment, not just charter status.

1. In an amicus brief supporting Custodia’s petition for Supreme Court review, the Blockchain Association said the 10th U.S. Circuit Court of Appeals went too far when it held that Federal Reserve Banks may deny master accounts even to institutions that are legally eligible for them. The trade group said that ruling gives the Fed broad power to exclude lawful digital asset businesses from banking access.
2. The association called the decision a ratification of the Fed’s use of payment services to pursue an impermissible policy goal: “debanking the digital asset industry.” It also warned that the ruling could give the Fed “veto power over chartering judgments by state regulators,” which is the sort of sentence that tends to get attention from any state-chartered high-risk operator.
3. Custodia Bank is a Wyoming-chartered special-purpose depository institution focused on digital assets. It has spent years seeking a Fed master account, which would let it settle payments directly through the central bank instead of routing through an intermediary institution. Custodia offers digital asset custody, payments and settlement infrastructure, and stablecoin-related products to institutional clients.
4. The Kansas City Fed rejected Custodia’s application after concluding that its crypto-focused business model posed undue risks to the banking system. In October 2025, a divided 10th Circuit panel upheld that decision. Judge David Ebel wrote for the 2-1 majority that “the plain language of the relevant statutes grants Federal Reserve Banks discretion to reject master account access requests from eligible entities.”
5. The Blockchain Association is asking the Supreme Court to adopt the reasoning of dissenting Judge Timothy Tymkovich, who said federal law provides that Fed payment services “shall” be available to eligible nonmember depository institutions. The association argued that this language is a command, not a suggestion, and that letting the Fed deny access would let federal regulators override state banking decisions inside the traditional dual banking system.

The case matters beyond Custodia because a master account is the gatekeeper to direct access to the Fed’s payment system. For crypto banks, stablecoin-related firms, and other high-risk businesses that live or die by banking access, the legal question is not abstract: who gets to decide whether a state-chartered institution can plug into central-bank rails?