Custodia’s Legal Battle with Federal Reserve Concludes Amid New Account Opportunities
- The U.S. Court of Appeals for the 10th Circuit rejected Custodia Bank’s appeal to challenge the Federal Reserve’s authority on master accounts in a vote of 7-3.
- Custodia has been contesting its master-account application rejection for years, seeking direct access to the Fed’s payment systems.
- Recently, Kraken became the first crypto firm to receive a limited account from the Federal Reserve Bank of Kansas City, which offers similar features to a master account.
- The Federal Reserve is developing new policies for “skinny” master accounts that may allow more crypto firms to gain access in the future.
- Judge Timothy Tymkovich dissented, arguing that the Fed’s discretion over master accounts could conflict with statutory and constitutional principles.
The court’s decision marks a significant setback for Custodia as it continues to pursue access to essential banking services while the Fed explores new account options for crypto firms. The recent approval of Kraken’s limited account indicates potential openings in this regulatory landscape.
With Custodia facing legal defeats and Kraken paving the way for crypto banks, the future of accessing master accounts remains uncertain as regulators work on new frameworks.(Source)
