Crypto group backs Custodia in Supreme Court fight over Fed access

The Blockchain Association is urging the US Supreme Court to hear Custodia Bank’s challenge to the Federal Reserve’s denial of a master account.

The crypto industry group filed an amicus brief Wednesday. It argued that federal law requires the Fed to provide payment services to eligible nonmember banks.

A master account would let Custodia access the Fed’s payment system directly instead of relying on an intermediary bank.

Custodia applied for an account in 2020. The Federal Reserve Bank of Kansas City rejected the application in 2023.

The Tenth Circuit Court of Appeals later ruled that the regional Fed bank had discretion to deny the request. In March, the court voted 7-3 against rehearing the case.

The association said that interpretation gives the Fed excessive control over state-chartered banks. It also linked the dispute to claims that regulators discouraged banks from serving crypto companies.

Custodia’s appeal comes as other digital asset firms gain deeper access to the US banking system. Kraken Financial received a limited-purpose Fed master account in March.

Coinbase and Circle have also received federal trust approvals, while Ripple, BitGo, Fidelity Digital Assets and Paxos have secured conditional approvals.

Traditional banking groups have resisted the trend. They argue crypto firms seek banking privileges without facing the full regulatory framework applied to conventional banks.

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