In Brief:
- Blockchain Association backs Custodia Bank as it asks the Supreme Court to clarify Federal Reserve master account access rules for institutions.
- Custodia lost its district and appeals court battles, while the Kansas City Fed must respond to its petition by September.
- Kraken Financial received a limited-purpose Fed master account, adding context to Custodia’s arguments over equal banking access for crypto institutions.
The Blockchain Association has backed Custodia Bank’s Supreme Court challenge over the Federal Reserve’s denial of master account access. According to the association, regional Fed banks should not have unchecked authority to reject eligible state-chartered institutions.
The industry group filed an amicus brief supporting Custodia’s petition and urged the Supreme Court to review the dispute. It wants the court to clarify how much discretion regional Federal Reserve banks have when considering master account applications.
Fed master accounts provide qualifying institutions with direct access to the central bank’s payment infrastructure. Consequently, they can play an important role for banks serving cryptocurrency and other digital asset businesses.
According to the Blockchain Association’s posts on X, lawful industries should not face exclusion from essential banking services through regulatory pressure. Moreover, the group argued that legitimate digital asset companies deserve equal opportunities to compete within the financial system.
Its amicus brief also raised concerns about the wider implications of previous court decisions. The association argued that those rulings could give federal regulators greater power to restrict banking access for disfavored industries.
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Custodia Pushes Years-Long Fed Dispute to Supreme Court
Custodia Bank first applied for a Federal Reserve master account in October 2020. Wyoming chartered the crypto-focused institution, which Wall Street veteran Caitlin Long founded.
However, the Kansas City Fed rejected the application in January 2023 because of concerns about Custodia’s cryptocurrency-focused business model. Custodia had already sued the Kansas City Fed in June 2022 over its 19-month application delay.
Later, Custodia expanded its legal arguments and claimed federal law requires master account access for eligible institutions. A district court rejected its case in 2024, while the 10th Circuit ruled against the bank in 2025.
Additionally, the full appeals court rejected Custodia’s rehearing request through a 7-3 decision in March 2026. Custodia then asked the Supreme Court to review how the Monetary Control Act applies to eligible nonmember institutions.
The bank argues that the law’s wording limits regional Fed banks’ ability to deny qualified institutions access. Meanwhile, the Kansas City Fed has until September 11 to respond to Custodia’s Supreme Court petition.
Kraken Master Account Adds New Context to Custodia Case
Significantly, another crypto-focused bank has already secured restricted access to Federal Reserve payment infrastructure. The Kansas City Fed granted Kraken Financial a limited-purpose master account in March 2026.
Kraken became the first crypto-native institution to receive such access. Its arrangement provides access to payment rails supporting high-value dollar settlements but includes several restrictions.
The account could support faster deposits and withdrawals for Kraken’s institutional clients. However, the arrangement does not provide access to interest payments on reserve balances.
Kraken’s approval adds another dimension to Custodia’s arguments about access for state-chartered institutions. Custodia maintains that eligible institutions should receive services in accordance with the requirements established by federal law.
Conclusion
Custodia’s petition places the Federal Reserve’s discretion over master accounts at the center of its Supreme Court challenge. A review could clarify how federal law governs access for eligible state-chartered financial institutions.
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