Custodia Bank, the Wyoming-chartered digital asset bank that has been locked in a legal cage match with the Federal Reserve since 2022, is preparing to ask the US Supreme Court to weigh in on a deceptively simple question: can the Fed deny master accounts to eligible banks without any real limits on its discretion?
A long road to the highest court
Custodia, a Special Purpose Depository Institution focused on digital assets, first applied for a Federal Reserve master account back in October 2020. A master account is essentially a bank’s ticket to the Fed’s payment rails, the infrastructure that lets financial institutions move money, settle transactions, and interact with the broader banking system.
The Fed said no in January 2023, citing concerns about digital asset risks tied to Custodia’s crypto-focused business model.
Custodia didn’t take it quietly. The bank had actually sued the Federal Reserve Board months earlier, in June 2022, arguing that the Fed lacked authority to reject an application from a statutorily eligible depository institution.
