Crypto group backs Custodia in Supreme Court battle over Fed access
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
The Blockchain Association filed an amicus brief urging the US Supreme Court to hear Custodia Bank’s challenge against the Federal Reserve’s denial of its application for a master account. Custodia, a Wyoming-chartered crypto-focused bank, applied in 2020 for direct access to the Fed’s payment system but was denied by the Federal Reserve Bank of Kansas City in 2023. The Tenth Circuit Court ruled the Fed had discretion to reject the application, and the Supreme Court is now Custodia’s last chance for review.
Why it matters
The Blockchain Association argues the Fed’s denial contradicts federal law that requires payment services be available to eligible nonmember banks, limiting Custodia’s ability to operate independently. The appeal raises concerns about federal regulators’ influence on crypto banking access, describing it as part of a wider pattern of “crypto debanking” under “Operation Choke Point 2.0.” This has implications for the inclusivity of banking services to crypto firms and challenges the Fed’s authority scope.
Key context
Custodia seeks direct Fed access to bypass intermediary banks for payment services, a critical capability for crypto banks. Meanwhile, other crypto firms have gained limited or conditional federal banking charters and Fed system access, such as Kraken Financial receiving a limited master account and Coinbase obtaining conditional approval for a national trust company charter. These developments indicate a gradual increase in crypto banking integration within the US regulatory framework, despite resistance from traditional banking groups.
Key numbers and entities
Key parties include Custodia Bank (Wyoming-chartered), the Federal Reserve Bank of Kansas City, the Blockchain Association, the Tenth Circuit Court of Appeals, and the US Supreme Court. Regulatory bodies involved are the Federal Reserve and the Office of the Comptroller of the Currency (OCC). Other crypto firms mentioned with federal approvals are Kraken Financial, Coinbase, Circle, Ripple, BitGo, Fidelity Digital Assets, and Paxos. The Tenth Circuit ruled 7-3 against rehearing Custodia’s case in March.
What remains unclear
The source does not flag open questions but does not provide details on the Supreme Court’s decision timeline or potential outcomes. It also does not elaborate on the specific criteria the Fed uses to approve or deny master account applications beyond the general legal principles discussed.